The European elections set off delayed market reactions as the European Union begins to come unglued. The elevation of a socialist again to the French presidency and gains made by neo-Nazis in Greece show there is no political will for the austerity measures needed to return the countries to a firmer financial footing. The euro may crumble or Greece may exit the union, or both.
As the Dow Jones Industrial Average fell below the 13,000 mark again, some companies fell even harder, so first let's see whether they had good reason to drop. Sometimes, panic-fueled declines can make excellent buying opportunities.
A disconnect on growth
It's not so much a surprise that Provenge is experiencing only "modest growth" according to first-quarter results -- heck, sales of Dendreon's (NAS: DNDN) only marketed drug were actually a little bit above expectations again -- but it's the slow realization that the prostate cancer treatment may never be the blockbuster once hoped for that sent the biotech's shares plummeting 25%.
Whether it was cost, reimbursement policies, or whatever, the window of opportunity appears to be quickly slamming shut. Johnson & Johnson (NYS: JNJ) makes competing therapy Zytiga, which is growing sales even faster than Provenge, with analysts expecting it to make the $1 billion peak sales mark, and Medivation has under development MDV3100, which looks promising.
At least one analyst says there's really only one option available to Dendreon as a catalyst for its stock to rise, and that's for it to get bought out. Highly rated CAPS All-Star TSIF agrees, noting that that was the plan from the beginning as this go-it-alone approach is a road too difficult to travel.
The hazards of going it alone in a tough medication market, especially with a drug that is expensive and needs customization. I believe Dendreon could still be a buyout candidate by someone with a better channel already established. This was the intent from the beginning.
Add Dendreon to your watchlist, then tell us on the Dendreon CAPS page or in the comments section below who you think might be a willing buyer.
In search of a dent puller
Remember those auto-body repair commercials from the 1980s where after a car wreck someone came on to say, "Uh-oh, better get Maaco"? Well, it looks like the first-quarter earnings wreck for MAKO Surgical (NAS: MAKO) will have the surgical robotics company looking for a repair specialist too.
Sales of its premier RIO system were disappointing to say the least as only five units were sold, leading management to dramatically cut full-year guidance. Considering how strong sales were in the fourth quarter, it looks like a lot of RIO systems sales may have been pulled forward.
But as the Fool's Evan Niu points out, such slim sales in the first quarter are nothing new. Two years ago the company had equally dismal results but went on to post stronger and stronger gains in the quarters following. Even though investors bailed en masse from the stock yesterday, sending it careening downhill by 36%, there's little reason to believe it's been totaled. MAKO should be able to salvage itself, particularly since there's typically a seasonal drop off in Q1.
Still, the tough talk last time around of being financially sound enough to not need to tap the capital markets seems to have been just that -- talk -- as MAKO also lines up financing just in case. While planning for the future is always prudent, perhaps executives shouldn't be so bold if they can't back up the talk with the walk.
You can't say it's a general malaise in robotics sales even though Hansen Medical (NAS: HNSN) reported fewer sales too. Last month, Intuitive Surgical (NAS: ISRG) enjoyed a 24% increase in sales of its da Vinci systems, though its stock has pulled back from its highs too.
Tell me in the comments section below or on the MAKO Surgical CAPS page whether you think it will keep moving like a shark, then add the stock to the Fool's free portfolio tracker to see if it ends up swimming with the fishes.
Ready for a resurrection
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At the time thisarticle was published Fool contributorRich Dupreyowns shares of Intuitive Surgical, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Dendreon, MAKO Surgical, Intuitive Surgical, and Johnson & Johnson.Motley Fool newsletter serviceshave recommended buying shares of MAKO Surgical, Intuitive Surgical, and Johnson & Johnson.Motley Fool newsletter serviceshave recommended creating a diagonal call position in Johnson & Johnson. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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