Questcor Pharmaceuticals In Play Ahead Of Earnings Release
Myriad Equity | Apr 29, 2013 08:30AM ET
Traders and investors who are have long/short positions in Questcor Pharmaceuticals (QCOR) are eagerly anticipating the Q1 2013 earnings release set for Tuesday April 30th, 2013 after the closing bell. Wall Street’s EPS estimates are $.957 per share (non-GAAP) which represents 57% year-over-year earnings growth for the company relative to Q1 2012. Sales are also expected to be about $158 M, or 64.2% higher relative to Q1 2012.
Although the consensus estimate for this quarter’s earnings have been rising along with Acthar sales in recent months, the stock remains damaged by a ratings downgrade (“Buy” to “Sell) by Favus Institutional Research earlier in the month, focusing on the potential for Questcor to disappoint with Q1 2013 earnings due to lackluster Acthar sales. Although it saw a recovery rally last week, Questcor is down 10% in the last month as a result.
Short interest also remains stubbornly high, at ~29.3 million shares (or 51% of float). There are a number of reasons that bears are taking interest in Questcor, including “reimbursement issues” that could potentially damage H.P. Acthar sales, and lawsuits regarding the company’s marketing practices. Although these concerns have profusely damaged QCOR since here .
Although the short interest in QCOR is incredibly high, the market’s sentiments will not be able to derail Questcor so long that it continues the performance it’s had in the first quarter of 2013. The first quarter earnings release, which is due after the bell on Tuesday (4/30/2013), is very likely to surprise to the upside. Whether or not this will cause QCOR to pop high enough to induced a short squeeze is uncertain, although the fundamentals support a significantly higher valuation for the equity.
Disclosure: Long QCOR
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