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.
The recipe for market weakness remains the same yet again -- aside from relatively strong earnings data, any day housing data is released the S&P 500 (^GSPC -0.35%) struggles to maintain its gains.
Today's economic data was generally mixed, with two housing reports headed in opposite directions. On the plus side, new home sales leapt 9.6% in January to a seasonally adjusted rate of 468,000, which was a nice jump considering how poor the weather was in January across much of the country. It also marked this highest seasonally adjusted level seen in new home sales in nearly six years!
Then again, weekly mortgage loan origination data from the Mortgage Bankers Association showed that originations for the week ending Feb. 21 dipped by 8.5% week over week, following a decline of 4.1% from the prior week. What caused this mighty tumble, you ask? A 0.03% rise in 30-year fixed-rate mortgages to 4.53%. U.S. consumers continue to demonstrate week in and week out how spoiled they are by sitting on their hands despite lending rates that are only 100 basis points off their historic lows and are still well below the historic average. If consumers continue to snub their nose at these incredible rates, then the housing and banking sectors could find themselves in a world of trouble.
By day's end, the S&P 500 meandered higher by just a fraction, 0.04 points (0.00%), to close at 1,845.16, which was well off its midday high of nearly 1,853.
Despite the S&P 500's indecisiveness, there was no wavering from shares of Anika Therapeutics (ANIK 0.47%) which exploded to the upside by 33.2% after the Food and Drug Administration approved the biopharmaceutical company's marketing application for Monovisc, a single injection supplement to synovial fluid that helps alleviate joint paint and improves joint mobility for sufferers of osteoarthritis of the knee. Upon the first commercial sale of Monovisc by marketing partner DePuy Synthes,a subsidiary of Johnson & Johnson (JNJ 0.66%), Anika will receive a $5 million milestone payment. In addition, it is primed to receive royalties and other sales-related milestones depending on how well Monovisc performs. While I would certainly agree that upside is warranted today on this news, perhaps the move is a bit overdone considering that Anika will only deliver somewhere around $70 million in net product sales this year. This is a case in which I'd suggest giving the company a few quarters to allow its revenue potential to catch up with these lofty investor expectations.
Renewable products company Amyris (AMRS 66.67%) joined the party as well with a gain of 26.4% after it reported its fourth-quarter results and provided its fiscal 2014 guidance after the bell last night. For the quarter, Amyris' revenue more than doubled to $15.4 million from $5.9 million in the year-ago period as its net earnings-per-share loss shrank to $0.26 from $0.44. Comparatively, Amyris missed the mark twice with Wall Street looking for $18.7 million in revenue and a narrower loss of $0.23 per share. However, what got investors excited was the company's guidance for 2014. Amyris noted that it anticipates being cash flow positive with renewable product and collaborative revenue totaling $100 million-$115 million, and should be profitable on an EPS basis by 2015. Clearly renewable chemicals represent a big business opportunity, but I'd suggest sticking to the sidelines until we see genuine profit instead of promises.
Finally, ExamWorks (EXAM), a provider of independent medical examinations, as well as peer and bill reviews in North America, the U.K., and Australia, advanced 17.2% after it, too, reported fourth-quarter earnings results. For the quarter, ExamWorks reported record revenue of $158.8 million, a 14% increase from the year-ago quarter, with its adjusted EPS loss shrinking by half to $0.04 from $0.08. By comparison, Wall Street was looking for ExamWorks to lose $0.06 per share on just $151.5 million in revenue. The company made it an earnings beat trifecta when it announced a fiscal 2014 guidance of 13.5%-15.5% full-year revenue growth, with organic growth of 6.5%-8.5%. This translates to approximately $699 million-$711.5 million in full-year sales versus the current consensus of $646.2 million. This certainly looks like a transformational year for ExamWorks, with the company expected to finally be profitable. However, with shares more than tripling since the beginning of 2012, I have to think that, like today's other top gainers, its bottom line has quite a bit of catching up to do to its current valuation.
