Quarters, Analyst Days and a few Oil Speculation Updates

Checking in on a favorite royalty play, a reinsurer, and some speculative catalyst-driven oil ideas from recent months

By Travis Johnson, Stock Gumshoe, November 15, 2013

I don’t have one big thing to share with you today, or any super-sexy little teaser picks that have jumped out at me as being fun ideas to share with my favorite group of people, and I haven’t done any buying or selling this week to speak of, but there are several stocks that I own or have written a lot about that are worthy of a quick update or two … so let’s jump right into it:

Ligand Pharmaceuticals (LGND), my favorite pharma royalty stock, had an “investor day” yesterday (you can listen to the webcast here or see the press release of the highlights here) in which they highlighted a few of their cash-generating programs, noted again the potential of their “new” women’s health drug (Duavee) with Pfizer (newly approved, though controversial and in development for nearly a decade), and of their Type 2 Diabetes compound that is just starting Phase 1 trials now. They also reiterated their cost-containment and “shots on goal” philosophy, telling analysts again that they have now 90 funded compounds in development and/or clinical trials with partners (80 clinical trials expected in 2014), with the potential for four more new drugs in the market next year if all goes well, and they will continue to keep overhead and operating expenses low. That’s all well and good, and a big part of the reason I bought the shares and suggested them to you a few months back, but now they’re getting more specific about future earnings potential.

They don’t have much of a track record on their guidance yet, and much of it is out of their control with the progression of their royalty-tied drugs since Ligand is not the seller or manufacturer of these drugs and they’re still very much reliant on just a couple huge drugs for most of their cash flow, but they’re now putting some numbers out that specifically outline the huge growth they expect and that is clearly becoming “baked in” to the stock price — here’s an excerpt of their press release with the details:

“Revenue and non-GAAP diluted EPS projections are as follows:

2014: Revenue in the range of $62 million to $64 million, with adjusted diluted EPS in the range of $1.40 to $1.45. 2015: Revenue greater than $81 million, with adjusted diluted EPS greater than $2.13. 2016: Revenue greater than $106 million, with adjusted diluted EPS ...

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