Healthcare Business

Key Stocks To Watch For the Week Ahead, The Unusual Suspects (AAPL, BRK-A, BRK-B, BJ, C, F, GM, GPRO, IP, KND, N, NRTLQ, ONTY, SPPI, YRCW)

International Paper Company (NYSE: IP) was given a top story by Barron’s this weekend called “No Peper Tiger.”  Barron’s cited a long restructuring and benefiting from the global rebound in packaging and paper demand, but noted that Wall Street hasn’t noticed.  After closing at $30.88 Friday, its 52-week range is $19.33 to $31.50 and Barron’s noted that it trades at 10.7-times this year’s and under 8-times next year’s earnings estimates. Barron’s cited one analyst having a $42 target but the Thomson Reuters consensus is $35.38.

Kindred Healthcare Inc. (NYSE: KND) had a very volatile week after shares went from $28 to $24 after the company commented on proposed 2012 medicare payment rates for skilled nursing facilities.  Shares went from about $28 to $24 before recovering a bit to close out at $25.22.  This weekend came a note from Barron’s that its acquisition of RehabCare will turn Kindred Healthcare into a powerhouse regardless of this Medicare reimbursement issue.  We’d look for another 2% or so recovery on Monday in a market-neutral scenario.

NetSuite Inc. (NYSE: N) was given a positive outlook in Barron’s over the weekend as being in the sweet spot and as gaining traction as it signs up more customers for its full suite of business software. Our only concern here is that shares were at a 52-week high on Friday at $34.84 and the stock closed at $34.61 versus a 52-week low of $12.11.  Barron’s may be a bit late on this one…

Nortel Networks Corp. (NRTLQ) may finally be done.  We have Monday as the day it seeks permission from bankruptcy court to auction off that last portfolio of patents.  After this, Nortel is effectively No-Tel as there is nothing left other than a decade of misery and blood.

Oncothyreon Inc (NASDAQ: ONTY) did some damage to itself on Friday after closing at $4.94 on Thursday and selling shares in a secondary offering at $4.00 per share on Thursday morning on the heels of good news that has driven shares higher.  While this was opportunistic for the company, this burned new holders and the stock closed down 8.3% FRiday at $4.52 against a 52-week range of $2.20 to $5.27.  We would expect some volatility to continue Monday and maybe Tuesday, but this usually trades about 200,000 shares per day.

Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) saw a drop of 13% to $9.00 on more than 7.4 million shares, but this was ahead of the FDA decision.  The headlines show that FUSILEV won FDA approval for colorectal cancer.  This one had very unusual options trading Friday and we’d look for a repeat on Monday.

YRC Worldwide Inc. (NASDAQ: YRCW) gave an update to its situation after the Teamsters and creditors approved its restructuring plan.  Shares fell over 20% to $1.56 after it turns out that prior shareholders get diluted all over again and will hold about 2.5% after the restructuring is completed in July. It noted that existing shareholders will hold about 2.5% of the outstanding common stock, but more important is that this might not be the end… It said this is subject to further dilution by a management incentive plan and the conversion of certain new securities.  This one is going to be bruised Monday morning.

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JON C. OGG

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