ELN Downgrade
By Johns Wu on Jan 19, 2006
The action today in ELN was really stupid. They were downgraded and this triggered a massive sell-off. The uptrend is still intact, but the massive volume today isn’t pretty.
Fundamentals and analyst number crunching shouldn’t matter for a company like ELN. The reason people are buying ELN isn’t to own a best-of-breed company. It is to gamble on the FDA ruling for Tysabri, which is expected any month now. As Cramer would say, ELN is the kind of stock you only buy with your "mad money."
I don’t own shares anymore, but I’m very experienced with ELN and Tysabri, and one tip I can provide you guys is to stop listening to the analysts! With the exception of the Irish brokerage houses like NCB and Davy’s, all the other analysts are completely braindead about ELN.
5 Responses to “ELN Downgrade”
I agree with what you wrote. I’d like to add to it:
1) The “correction” was very suspiciously accompanied by a NYSE malfunction, in which the close of yesterday was incorrectly restated at 5:51pm.
2) It is a great mistake to think that the ELN recent rally is a pure Tysabri play. Elan has a hugely promising Alzheimer program. WS is starting to realize the odds and prospects there.
3) As a bonus - look also at the NanoTech buisness.
4) Note that the LB ANALyst based his downgrade of ELN on a meeting with BIIB’s management. How in hell could he get the Elan Alz and Nano stories from them?
You will appreciate this.
“Investors are worried about competition from Tysabri to Copaxone, the latter being Teva’s proprietary treatment for relapsing/remitting multiple sclerosis, and the 2005 outlook, Silver writes.
He believes the Tysabri overhang will abate in quarter or two as investors realize that its impact won’t be that great.”
Check out following energy stocks for ascending traingle:
1. CHK
2. BTU
3. SWN (It has already moved upward from the ascending triangle but looks quite strong, I own it)
Check these ones too:
1. NGS (broke the downward trendline, is it a rebound!!!
2. F (Is it at a buy point?)
3. BMY (Could be a good candidate for swing trade…)
The way I like to look at events like this is that one person wrote an analysis that caused a panic sell on a profitable company, causing it to lose .9 Billion in value overnight (float x 2.11 per share decline). Analysts are smart, but a 12% drop in one day often is unsustainable in the short term. Now, the one thing that concerns me is the overall tone of the day was very bullish, the type of day where buyers are out in force and prone to buying value. In this overall tone, buyers were unable to sustain any kind of rally (the stock dropped to intraday lows again around 2pm). Still, picking it up near the intraday low probably is a relatively low risk short term swing trade.
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You neglected to mention the unexplained computer “glitch” that after trading hours falsified yesterdays close to show at $16.26. This was the catalyst for the precipitous price drop, this now-admitted “computer glitch” was not announced in a timely manner, and still does not show up where it should,, eg FIDO daily bulletin, YMB headlines.