Growth Stories: AVXS, AVAV, CHKP, FTNT, SQ, PRTK

AVXS – AveXis

About: a clinical-stage gene therapy company, engages in developing and commercializing treatments for patients suffering from rare and life-threatening neurological genetic diseases.

Pipeline:

AVXS-101:

  • The 1st ever gene therapy study for the treatment of SMA Type 1
  • Designed to address the monogenetic root cause of SMA by replacing the lost or defective primary SMN1 gene with a fully functioning human SMN gene
  • Accepted into the European medicine’s agency prime program that enhance support for the development of medicines which is similar to FDA.

SMA Type 1:

  • Is a devastating orphan disease that results in motor neuron loss and progressive muscle weakness
  • One in 10,000 live births
  • SMA is the most common genetic cause of infant deaths
  • Rapidly progressive and devastating
  • The average lifespan of a child with SMA Type I is only 8 months of age

Phase 1 result:

  • one-time infusion of AVXS-101 appears to be generally tolerated with a favorable safety profile
  • indicate a potential for clinically transformative effect on the event free survival
  • rapid and increase in motor function
  • achievement of motor milestone never seen in the history of this disease.

Plans for 2017: To participate in a chemistry manufacturing and control Type B meeting with the FDA in May.

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High Growth Stocks: OLED, DERM, FMI, SWIR

Summary

OLED

  • We are positive on OLED being widely adopted with production capacity being doubled and penetration rate in SmartPhone market expected to rise.

DERM

  • We are cautious that Dermira’s 2 Phase 3 drugs (treatment for excessive sweating and plaque psoriasis) which are for regulatory approval face multiple competitors.

FMI

  • We like FMI because it is a play on using genetic profiles to treat cancer. Currently it is the first-mover in applying for national Medicare coverage to allow more people to use its products.

SWIR

  • We believe SWIR is a play on the connected cars trend, however we are cautious as it faces numerous competitors and its products may soon be commoditized as connected cars become a norm and not a luxury in the future.

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MEGATREND: Fiber Optics

Narrative: 

These companies are about to experience a secular growth driven by 3 large catalysts:

  1. China (magic word)
  2. Upgrade to 100G technology by telecom firms in the U.S. and beyond
  3. Cloud-computing data centers packed with computer servers
  • Ex. Amazon, Google, and Facebook

A lot of these companies are still being priced like a cyclical company, we believe that as the secular growth continues, they will rerate.

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Why UA is a Good Short Candidate

Under Armour, Inc. (UA)

 
Market Cap: $12.2 Bil

 
Industry: Sports Apparel

 

Highlights 

  • The Athletic Apparel space is entering a period of over saturation, with the space becoming too crowded. A key clue is the two quarter decline in sales of their biggest supplier.
  • The performance basketball segment is experiencing intensifying competition, as Nike cuts prices and Adidas’ success is driving demand for more classics and retro shoes.
  • Management exits have made us wary of whether the company can live through the current tough environment.
  • Valuations are not pricing in the currently tough environment and potential lower margin assumptions due to the intensifying bid for endorsements and sponsorship.
  • Chart is breaking down from a long consolidation with volume
  • Relative weakness given recent market strength due to Trump win

Main points:
Under Armour has four main earnings drivers: all of which are currently seeing pressure. Continue reading

Why ATHN is a Solid Short

athenahealth, Inc. (ATHN)

Market Cap: $4.05 Bil

Industry: Hospital IT

Highlights

  • Industry that is maturing and showing decelerating growth
  • Intense competition in a fragmented market
  • High PE driven by a promotional CEO
  • Results have been missing estimates for two quarters
  • Chart is breaking down from a long consolidation with volume
  • Relative weakness given recent market strength due to Trump win

Main points:
The company offers cloud-based services for medical groups. It currently caters to the ambulatory group which is medical care provided on an outpatient basis. The three main drivers of its growth narrative comes from the following: Continue reading