LOS ANGELES (MarketWatch) -- Japan's Nikkei Average (JP:NIK) traded 0.5% higher in the early minutes Tuesday, extending the previous day's 0.9% advance, with the market getting some support from overnight gains for U.S. shares and a slightly weaker yen (dollar at ¥101.56 vs. ¥101.40 at Monday's open). Among the gainers, Toshiba Corp. (JP:6502) (TOSYY) rose 1.7%, Hitachi Ltd. (JP:6501) (HTHIF) gained 1.5%, NEC Corp. (JP:6701) (NIPNF) improved by 2.5%, Bridgestone Corp. (JP:5108) (BRDCF) added 2.7% to extend gains over the past couple weeks following the company's purchase of U.S.-based Masthead Industries, and Mitsubishi Heavy Industries Ltd. (JP:7011) (MHVYF) traded 1.1% higher as a Wall Street Journal report said the industrial major's Mitsubishi Aircraft unit had reached a tentative deal to sell 40 jets for the planned revival of defunct U.S. carrier Eastern Air Lines Group Inc. Auto makers were firmer as well, with Nissan Motor Co. (JP:7201) (NSANY) up 1.3%, Toyota Motor Corp. (JP:7203) (TM) up 0.5%, and Honda Motor Co. (JP:7267) (HMC) leading the sector with a 1.8% advance after the company said it would start moving its portable outboard-engine production to China next April, according to a Nikkei news report. Among decliners, Alps Electric Co. (JP:6770) lost 1.3%, and chemical-engineering company Showa Denko KK (JP:4004) pulled back by 1.4%, getting no love from a Nikkei report tipping its January-June profit to come in 50% higher than in the year-earlier period. Japanese investors were also awaiting the latest policy decision from the Bank of Japan, expected sometime around the market's midday break, though most economists saw little chance of any change to policy.
Biotech Better Beat Earnings…Or Else
Remember when biotech stocks like Gilead Sciences (GILD) and Celgene (CELG) were getting creamed and everyone was wondering if the biotech boom was finished? Yeah, neither do I.
We’d better refresh our memories, however. The iShares Nasdaq Biotechnology ETF (IBB) has rallied 20% since dropping 21% from the February 25 through April 11. And large-cap biotech stocks now trade at 16.3 times 2015 earnings versus the S&P 500′s 14.8 times. That, says Nomura’s M. Ian Somaiya and team makes beating earnings forecasts an imperative, who says “lackluster 1Q earnings have increased reliance on solid 2Q results to maintain momentum in the group.”
Somaiya points to Gilead Sciences, Alexion Pharmaceuticals (ALXN), Celgene and Incyte (INCY) as the biotech companies most likely to beat earnings:
For Gilead Sciences, we believe Sovaldi sales reach $3bn, almost 2x our $1.6bn and above the Street's $2.6bn estimates, based on strength of prescription data. For Alexion Pharmaceuticals, we believe upside will come from a higher-than-expected rate of patient starts in ROW territories for PNH, a $1-2bn opportunity, and Europe for aHUS. For Celgene, we believe 2Q revenue estimates could be understated due to 1Q seasonality and inventory drawdowns, setting up for a potential beat in Revlimid, Pomalyst and Abraxane. For Incyte, we expect Jakafi sales to bounce back in 2Q, given inventories returned to the low end of the normal range, gross-to-net returns to the 9-10% guidance, and a 4.75% price increase on 1 April. In addition, data presentations at ASCO could have increased off-label usage in pancreatic cancer and PV.
Shares of Gilead Sciences have gained 1.4% to $89.96 at 1:26 p.m., Alexion Pharmaceuticals has risen 0.6% to $164.22, Incyte has advanced 1% to $51.34 and Celgene has fallen 0.8% to $84.46. The iShares Nasdaq Biotechnology ETF is up 0.6% at $258.33.
This Blood Management Company Can Be A Safe Investment
The market for blood plasma has shown unremitting growth in the past years growing at a compound annual growth rate of approximately 10% over the past decade, and is projected to expand steadily in the years to come. The blood plasma market represents a US$11.7 billion global industry of which an estimated US$1.7 billion is sold in Asia, including China and India. Not just the blood plasma, but even the blood collection is also anticipated to grow with a CAGR of 10.11% through 2016, an increase in the aging population, growing number of cancer therapies, and rise in surgical operations are among few reasons responsible for this growth of blood plasma and blood collection equipment market.
Haemonetics (HAE), pioneers in the blood-collection equipment market with around 75% market share in the U.S., is poised to capitalize on this market growth. For the fiscal 2014, Haemonetics reported revenue of $938.5 million, up 5%. Base revenue, exclusive of the whole blood business, increased 1% on a constant currency basis. To continue registering growth in this expanding market, the company is focusing on developing innovative solutions for managing blood with its acquisition strategy.
Growth from blood plasma
Haemonetics expects growth opportunities from its plasma business, which is expected to grow significantly with long-term contracts. For the fiscal 2015, the Company expects $40-$50 million of revenue growth from its identified growth drivers of Plasma, TEG and Emerging Markets. Plasma business currently accounts for around 30% of Haemonetics' total revenue, and it provides equipment for plasma collection. 98% of its plasma business is under contract until the third quarter of fiscal year 2015. One such contract includes a deal with Haemonetics' major plasma customer, Grifols . Grifols is world's leading provider of plasma therapies and had acquired Talecris Holdings for $3.4 billion. Post-acquisition, Grifols increased its number of plasma therapies, which increased its demand for raw plasma. As its primary supplier, Haemonetics fulfills this demand resulting is revenue growth for Haemonetics.
The global plasma market is expected to grow at a CAGR of 10.31% over the period of 2012-2016, with the major growth in the developed U.S market due to increasing demand to treat autoimmune and neurological conditions. Autoimmune diseases arise out of an inappropriate immune response in the patient's body against foreign substance or tissues present in the body.
The plasma business remains sturdy and the Company expects 7-9% growth in Plasma disposables in fiscal 2015.
Acquisitions that enables future growth
Whole blood is obtained through blood donation from which no constituent like red blood cells, white blood cells, plasma, or platelets, is removed. Whole blood management has not seen much improvement since 90% of blood collected globally uses a manual process that includes record keeping, handling, and transportation. This provides ample opportunity for Haemonetics, which is working towards the improvement of existing processes through acquisition.
In the past, Haemonetics acquired the blood-collection business of Pall Corporation for $550 million. Haemonetics blood collection products use blood filter equipment, and the Pall acquisition brought the filter in-house, providing some level of vertical integration and reducing manufacturing cost of producing filter equipment. Pall's existing and under-development products are expected to help Haemonetics launch its automated whole blood collection system in the next few years. Pall will deliver manufacturing assets to help launch Haemonetics' automated whole blood collection system in 2016.This will provide growth opportunity in the above mentioned manually handled whole blood market.
In addition to Pall's acquisition, Haemonetics also acquired Hemerus Medical, a whole blood collection company, for $24 million. This acquisition will provide Haemonetics with a unique capability in the whole blood market, because of SOLX technology. Hemerus developed SOLX, a specialized red blood cell storage technology that extends the life of red blood cells. According to the FDA, red blood cells can be stored for up to 42 days, and SOLX can extend this storage period to 56 days. This extension of the storage period will make blood donations viable for a longer period, allow easier inventory management of red blood cells, and minimize wasting blood.
Conclusion:
Haemonetics' whole blood market will certainly provide a long-term growth driver for the company primarily based on its acquisition strategies. The plasma market is also a potential revenue generator for the company. I believe that the stock price will continue to rise in the upcoming years because of the above discussed strategies.
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Tesla Motors, Inc. Model S: Still the Safest Car on the Road
The media seems to love to cover Tesla (NASDAQ: TSLA ) accidents. As Tesla has pointed out, several high-speed accidents that resulted in electric-car battery fires sparked more national media coverage in 2013 than the 200,000 gasoline car fires in North America during the same period. Until now, Tesla has also been able to point to the fact that there have been no deaths or serious injuries of any kind in the Model S. But the automaker (sort of) lost its bragging rights to this important streak due to a July 4 accident.
The fully electric Model S gets up to 265 miles on a full charge. Image source: Tesla Motors.
A senseless tragedy
The incident began when Joshua Slot stole a Model S from a Tesla service center in Los Angeles, according to news reports. Police began a high-speed pursuit. Though officers eventually gave up on the chase, Slot reportedly continued traveling at speeds around 100 mph, eventually colliding with three other vehicles and two street poles.
The Model S ended up split in two, with its battery ablaze. Because he wasn't using a seat belt, the driver was ejected. In critical condition, he was rushed to the emergency room. Slot died on Monday, July 7. Five other people were injured during the incident.
There is clearly nothing Tesla could have done to prevent this accident from happening.
While the statistic that the odds of a fire in a Model S are five times lower than those for the average gasoline car likely still holds true, Tesla can no longer boast a fatality-free track record for the car. But as The Verge pointed out, "few people will be pointing fingers at the electric car maker for this senseless tragedy."
The safest car ever built
Despite the severity of this incident, Tesla investors should continue to ignore reports of Model S accidents and battery fires. With about 50,000 of the vehicles on the road now, accidents are inevitable. Will we see headlines for Model S flat tires next?
Tesla's "frunk," which allows for a larger crumple zone, is one of the reasons for the Model S' unprecedented safety rating. The motor, which measures just about a foot in diameter, is seated on the rear axle. The frunk wouldn't be possible if the car were not electric. Image source: Tesla Motors.
Safety is a strong point for Tesla. In fact, the National Highway Traffic Safety Administration, which tests every vehicle sold in the U.S., concluded that that the Model S is the safest car ever. Based on the rating provided to manufacturers, the Model S' score even exceeded the safety scores of all SUVs and minivans.
If anything, Tesla's safety record (even after this recent tragedy) is a reason to hold on to the stock, not a reason to sell.
How to invest in a new, revolutionary vehicle technology
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.