Why Express, Ambit Biosciences, and Thompson Creek Metals Tumbled Today

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

Investors suffered through a fourth day of losses for the broad market, as both the Dow and S&P didn't manage to avoid modest declines despite having bounced back from much larger pullbacks earlier in the session. Yet with the Dow and S&P 500 falling less than 0.2% and the Nasdaq actually rising slightly on the day, the huge declines for Express (NYSE: EXPR  ) , Ambit Biosciences (NASDAQ: AMBI  ) , and Thompson Creek Metals (NYSE: TC  ) stood out among the market's losing stocks.

Express dropped by 23% after giving negative guidance in its quarterly earnings report. Even though the retailer posted reasonable gains in sales and earnings for the third quarter, Express reined in its full-year earnings expectations, cutting its expected range by $0.06 to $0.09 per share. The retailer's comments only emphasize the extent to which promotional discounting has become more prevalent than ever, pointing to the likelihood that results for the holiday quarter throughout the industry won't manage to achieve hoped-for levels.

Ambit plunged 33% following bad news concerning its acute myeloid leukemia drug prospect quizartinib. The company announced that the FDA chose not to allow it to file for approval based solely on its trial data from phase 2 and 2b studies, instead requiring it to run a more costly and time-consuming phase 3 trial before considering a new drug application. Even though the company has substantial cash reserves to sustain it as it runs the study, investors nevertheless weren't happy with the delay.

Thompson Creek posted a nearly 10% decline, falling to a new low as analysts at TD Securities kept their negative rating on the mining company and again called for the stock to drop substantially from current levels. With the company seeing substantial amounts of debt coming due in the next four to six years, Thompson Creek needs to see prices of molybdenum return to higher levels in order to help support its debt repayment. Moreover, with its Mt. Milligan exploration project not yet having proven itself -- especially with gold and copper prices depressed -- Thompson Creek could have trouble making enough money to avoid hugely dilutive measures in the future.

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  • Report this Comment On December 05, 2013, at 12:48 AM, techpatriot wrote:

    Email response from TC:

    Over the past several weeks, we have been meeting with sell-side analysts and institutional holders to introduce our new CEO, review our Q3 financial results and provide an update on the Mt. Milligan ramp-up. Our message has been positive and consistent with everyone whom we've met. It is also consistent with what was stated on our conference call:

    1. The Mt. Milligan ramp-up continues to go well.

    2. We believe we will have sufficient cash to get us through the ramp-up period.

    3. We do not believe we have liquidity issues.

    4. None of our outstanding notes mature until 2017 at the earliest, which gives us several years of what we expect to be strong performance at Mt. Milligan to generate significant cash.

    5. Once Mt. Milligan is fully operational and generating cash, we will review our debt structure and consider options available to us at that time to possibly refinance, repurchase, etc. our debt.

    6. We’ve begun shipping concentrate from MTM, and expect our next shipment in January 2014.

    7. We expect to reach commercial production on Q1 2014.

    We met with TD Securities and communicated the message above. Unfortuntely, the analysts run their own models, make their own assumptions, and write what they see fit, even after they meet with us. We cannot control what they write. We will issue 2014 production and cost guidance once 2014 budgets have been approved.

    Please do not hesitate to contact me should you have additional questions or concerns. I am traveling, but will be back in the office on Friday.

    Pam Solly

    Director, Investor Relations

    303 762 3526 Less

  • Report this Comment On December 05, 2013, at 12:52 AM, techpatriot wrote:

    Also, I might also point out that the TD Securities "report" assumes all the worst case scenarios for all six forecast parameters including metals pricing, throughput, grade, recovery percentage, operating costs and capex, as well as disregarding all moly production.

    The odds on all six of those items coming in at the worst case scenario for 2014 have to be on the order of extremely improbable and unlikely.

  • Report this Comment On December 05, 2013, at 7:13 AM, techpatriot wrote:

    Also, according to the TD Securities on TC under Disclosures on page 5, there appears to be what I would call something quite interesting....

    Disclosures on TC Report:

    5. A long position in the securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which the research analyst has discretion or control.

    9. TD Securities Inc. and/or an affiliated company is a market maker, or is associated with the specialist that makes a market, in the securities of the subject company

  • Report this Comment On December 05, 2013, at 5:30 PM, hank321 wrote:

    Could the TD folks be deliberately bad-mouthing the firm,...in order for friends to build a larger position at a bargain price? The SEC should inquire.

    LINE appears to have been victimized by this kind of a strategy in the past 4 months.

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