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SIGA Technologies Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of bio-defense specialist SIGA Technologies (Nasdaq: SIGA  ) sank more than 15% in intraday trading Thursday after its quarterly results came in well below Wall Street expectations.

So what: For the fourth quarter, SIGA reported an ugly loss of $13.58 million, or $0.29 per share, on revenue of $3.06 million, while analysts were projecting a profit of $0.03 per share on a top-line of $10.03 million. The shares had been rising in recent weeks on the expectation of a big government contract win to supply millions of doses of smallpox antiviral, but today's operating results, coupled with no overly bullish comments from management regarding the potential contract, has Mr. Market understandably disappointed.

Now what: Last month, I wrote that SIGA wasn't suitable for most Fools, and today's plunge hasn't changed that. While a Wedbush Securities analyst recently noted that the government contract could potentially result in a whopping $2.8 billion in sales, it's a bet best suited for less risk-averse investors. The stock is still up more than 100% from its June lows and trades at a price-to-sales ratio above 30, so there seems to be plenty of downside if that gamble goes wrong.

Interested in more info on SIGA? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (2) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 10, 2011, at 4:16 PM, lambo7039 wrote:

    Do you bother to fact check? You are using the fourth quarter sales and the FULL YEAR loss.

    Here is the actual information:

    For the three months ended December 31, 2010, revenue was $3.1 million compared to $4.0 million in the fourth quarter of 2009, and net operating loss was $4.2 million compared to $3.7 million in 2009.

    So take back the "ugly loss of $13.58 million" comment, and get it right next time!

  • Report this Comment On March 11, 2011, at 6:47 AM, tinghu wrote:

    ST-246, The only CURE for smallpox & the only CURE since penicillin is the reason to invest

    in SIGA.

    The U.S. Government, WHO,Israel,etc. are all waiting in line to place orders to protect their populations

    against a bioterrorist attack using smallpox or to protect their military who become infected by smallpox after vaccination.

    The first contract for $2.8B is imminent.

    This Fool has not done his DD; citing financials of

    a revenueless/earningsless company without citing the ST-246 story is the proof.

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