TEVA opened this morning at $43.00. So far today the stock has hit a low of $42.55 and a high of $43.78. As of 12:25, TEVA is trading at $42.84, up $0.65 (1.5%). The chart for TEVA looks bullish and S&P gives TEVA a positive 5 STARS (out of 5) strong buy ranking.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $35 range.
WYE opened this morning at $32.68. So far today the stock has hit a low of $32.68 and a high of $34.29. As of 12:45, WYE is trading at $33.70, up $1.26 (3.9%). The chart for WYE looks neutral and S&P gives WYE a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $27.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just five weeks as long as WYE is above $27.50 at December expiration. Wyeth would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.
WYE hasn't been below $28 at all in the past year and has shown support around $30 recently. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in WYE.
Pfizer (NYSE: PFE - option chain) shares are rising today as the company is set to appear before a FDA committee to determine the suitability of an osteoporosis drug. Quite often in situations like this one, the options prices become over-inflated as people bet that the stock will either rise or fall based on the outcome of this hearing. With a credit spread trade, we would make money by selling options, so that overpricing is a good thing. If you think that the stock won't fall by too much in the coming months, then now could be a great time to look at a bullish hedged trade on PFE due to the over-priced options.
PFE opened this morning at $18.84. So far today the stock has hit a low of $18.76 and a high of $19.19. As of 12:40, PFE is trading at $19.03, up 52cents (2.8%). The chart for PFE looks neutral and S&P gives PFE a 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just over four months as long as PFE is above $15 at January expiration. Pfizer would have to fall by more than 21% before we would start to lose money. Learn more about this type of trade here.
PFE hasn't been below $17 at all in the past year and has shown support around $18 recently.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in PFE.
When you're hot you're hot, and when you're Whole Foods Market (NASDAQ: WFMI) you're ice cold -- and you're a health food store recalling beef provided by a supplier with a long history of USDA run-ins and a role in the latest outbreak of E. coli.
The Washington Post reports that "The meat Whole Foods recalled came from Coleman Natural Foods, which unbeknownst to Whole Foods had processed it at Nebraska Beef, an Omaha meatpacker with a history of food-safety and other violations. Nebraska Beef last month recalled more than 5 million pounds of beef produced in May and June after its meat was blamed for another E. coli outbreak in seven states."
Nebraska Beef's history of run-ins with the FDA is pretty remarkable: sanctions for problems including feces-contaminated carcasses, water from pipes dripping onto meat, and E. coli issues as far back as 1997.
That Whole Foods was unaware that it was acquiring its merchandise from such a questionable source raises serious questions about its quality control and sourcing -- those are two of the main reasons that many consumers are willing to pay a premium for Whole Foods products.
This is probably an isolated incident but, from a PR perspective, it's likely to be very damaging. With its reputation for being expensive (see Sarah Gilbert's Whole Paycheck) hurting sales in the current climate, Whole Foods is ill-equipped to deal with a scandal like this.
Drug companies have never liked the FDA. Why should a government agency tell them whether their drugs are safe or effective? The FDA approval process can be a long one, and often new treatments are turned down.
According toThe Wall Street Journal, the head of Schering-Plough (NYSE:SGP) believes that an "intensifying focus on safety and a diminished tolerance for side effects at the Food and Drug Administration have dramatically lowered the odds that the drugs would make it to market -- at least not without a lot of extra time and money."
Perhaps if pharmaceutical companies had a better track record for safety, the process would not to be so long. It is not that long ago that the FDA discovered that anti-depressants could lead to suicidal thoughts. More recently the agency warned that anemia treatments including Aranesp, Epogen and Procrit increased the risk of strokes and heart attacks.
Drug company earnings may be hurt by a long FDA approval process, but, without the current system there would likely be an increase in deceased patients.
Douglas A. McIntyre is an editor at 247wallst.com.
Merck & Co (NYSE: MRK) shares are falling today after the company reported that FDA approval its new cholesterol drug will likely be delayed until 2013. The FDA first rejected regulatory approval of the drug in April, and requested more information from company studies. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on MRK.
After hitting a one-year high of $61.62 in December, the stock hit a one-year low of $34.49 earlier last month. This morning, MRK opened at $35.40. So far today the stock has hit a low of $35.00 and a high of $35.83. As of 12:25, MRK is trading at $35.03, down 57 cents (-1.6%). The chart for MRK looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bearish hedged play on this stock, I would consider an October bear-call credit spread above the $42.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in four months as long as MRK is below $42.50 at October expiration. Merck would have to rise by more than 21% before we would start to lose money.
MRK hasn't been above $42.50 since March and has shown resistance around $39 recently. This trade could be risky if the company's earnings (due out in mid-July) are a positive surprise, but even if that happens, this position could be protected by resistance MRK might find at its 50 day moving average, which is currently around $38 and falling.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in MRK.
Chantix, an anti-smoking drug from Pfizer (NYSE: PFE), would seem to be good for people. Smoking causes heart and lung problems and who knows what else. The trouble with the drug is that it seems to cause heart problems, called cardiac arrhythmia, all on its own. That seems counter-productive.
The drug may also make some people crazy, at least to the level of causing suicide and depression in a portion of patients.
The Institute for Safe Medication Practices said, "Based on the data available now, the existing warnings are completely inadequate," according to The Wall Street Journal.
The news points to an ongoing problem in the drug industry. Big Pharma wants to get products to market fast and sell as much as it can. Many of the current drugs that get them revenue are going "off patent" and will be sold by generic drug companies. That kills most of the profits on the treatments.
But, in the race to get the drugs out, it seems that side effects are overlooked and overlooked often.
Profits versus people being sick or dead. Hard decision.
After hitting a one-year high of $56.60 in July, the stock hit a one-year low of $35.03 in March. AZN opened this morning at $41.50. So far today the stock has hit a low of $41.29 and a high of $41.76. As of 11:55, AZN is trading at $41.42, up $0.75 (1.8%). The chart for AZN looks bullish and deteriorating slightly, while S&P gives the stock a neutral 3 Stars (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $35 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 14.9% return in just five months as long as AZN is above $35 at October expiration. AZN would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
Day one of the two-day FDA Anesthetic/Life Support Drugs & Drug Safety/Risk Management Advisory Committees meeting: Purdue Pharma's NDA for Oxycontin.
Anadarko Petroleum (NYSE:APC) to report Q1 earnings; conference call Tuesday at 10:00am.
Tuesday, May 6
Day two of the two-day FDA Anesthetic/Life Support Drugs & Drug Safety/Risk Mgmt Advisory Committees meeting: Cephalon's (NASDAQ:CEPH) sNDA for Fentora.
Molson Coors (NYSE:TAP) to report Q1 earnings; conference call at 12:00pm.
GlaxoSmithKline (NYSE: GSK) shares are trading higher after the Food and Drug Administration approved GSK's Advair Diskus 250/50 for the reduction of exacerbations in patients with chronic obstructive pulmonary disease (COPD). Advair is now the only FDA-approved treatment for the reduction of COPD exacerbations. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on GSK.
After hitting a one-year high of $58.33 last May, the stock hit a one-year low of $40.51 in March. GSK opened this morning at $44.51. So far today the stock has hit a low of $44.42 and a high of $44.85. As of 12:35, GSK is trading at $44.61, up 0.50 (1.1%). The chart for GSK looks bullish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $37.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just three and a half months as long as GSK is above $37.50 at August expiration. GSK would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.
GSK hasn't been below $40 at all in the past year and has shown support around $42.50 recently. This trade could be risky if one of the company's drugs runs afoul of the FDA, but even if that happens, that position could be protected by support the stock might find just above $41, where it bottomed out in March.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in GSK.
Abbott Laboratories (NYSE: ABT) shares are trading higher after the Food and Drug Administration denied regulatory approval for Merck & Co.'s (NYSE: MRK) cholesterol drug Cordaptive. The Merck drug would have directly competed with ABT's own cholesterol drug. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ABT.
After hitting a one-year low of $49.58 in July, the stock hit a one-year high of $61.09 in January. ABT opened this morning at $53.32. So far today the stock has hit a low of $52.97 and a high of $53.73. As of 12:10, ABT is trading at $53.24, up $1.63 (3.2%). The chart for ABT looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in just seven weeks as long as ABT is above $50 at June expiration. Abbott would have to fall by more than 6% before we would start to lose money. Learn more about this type of trade here.
Merck (NYSE: MRK) was counting on its new cholesterol drug to help its revenue in the years ahead. It won't work out. The drug, Cordaptive, was turned down by the FDA.
According toThe Wall Street Journal, "Merck was counting on Cordaptive to bring in as much as $2 billion a year in sales." The news is likely to hurt the company's stock, which trades at $41.44, well below its 52-week high of $61.62.
Merck's revenue last year was just over $24 billion, so the rejection will hurt, and perhaps hurt a great deal.
Merck is one of a handful of Big Pharma companies that have a number of important drugs coming "off patent." That means that cheap generics will flood the market and margins on the original drugs will disappear. Creating a "blockbuster" drug can take years of R&D, so Merck is left with relatively high costs against falling revenue.
The best way to look at Merck, and the shares of companies like it, is to watch for approval of drugs that are likely to bring in billions of dollars. Without those Merck and its peers will have falling share prices for years to come.
Douglas A. McIntyre is an editor at 247wallst.com and the author of Ten Stocks Under $10.
Most Americans don't want to be poisoned by medications or components used to make medications which come from overseas. Imports from China come to mind.
Over the last month, the government has disclosed that over 80 people in the US have died from tainted Heparin, a blood thinner. So far, the most likely cause is problems with a basic ingredient for the drug which is made in China.
Now word comes that for just $70 million, inspections could be much better and more widespread. That is $70 million dollars which could save lives and protect consumers from bad drugs. Only $70 million.
According toThe Wall Street Journal the FDA "would need about $15 million to inspect about 700 facilities in China alone." That seems like a very modest investment.
Genentech announced that its profit during the first-quarter rose 12% to $790 million, or 74 cents per share, boosted by strong cancer drug sales. These numbers are up from $706 million, or 66 cents a share reported in the same period a year ago. Excluding special items, the company's earnings would have come at 84 cents a share, exceeding analysts' forecasts for a quarterly profit of 82 cents a share.
The company's quarterly revenue saw a growth of 8% to $3.06 billion, up from $2.84 billion a year ago. However, this was not enough to beat analysts' predictions for sales of $3.1 billion in the quarter, according to Thomson Financial.
Teva Pharmaceuticals (NASDAQ: TEVA - option chain) shares have moved higher today after the Food & Drug Administration approved the company's generic version Pulmicort, an asthma drug made by competitor AstraZeneca (NYSE: AZN). If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on TEVA.
When you're hot you're hot, and when you're 
Drug companies have never liked the FDA. Why should a government agency tell them whether their drugs are safe or effective? The FDA approval process can be a long one, and often new treatments are turned down.
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Shares of biotechnology giant 
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Closing Bell: Stocks continue to plummet; AMGN, GE, MSFT, PEP, STP all down
