Gold Has More Room To Grow As The Fed Could Provide More Stimulus


Since my last gold-related column in February, gold price passed the $1,900 mark for the first time since 2011. Gold tends to thrive in times of uncertainty as investors stock up on the yellow metal as a haven. Despite the high uncertainty in the markets, the stock market has rallied from its March lows, due to the Federal Reserve’s stimuli and hopes of a rapid V-shape recovery. This rally hasn’t impeded gold’s bull run that could continue, as the U.S.’s economic recovery may stall and the Fed may need to provide more support to the financial markets.

The rise in Covid-19 cases in the U.S. has led many states to close down businesses and reverse some of the early recoveries in May/June in the job market and consumption. This second wave of Covid-19 cases is expected to manifest itself in leading economic reports, such as jobs and retail sales reports. If so, the weakness in the economic data could fuel more demand for gold.

Also, the uncertainty over the direction of the U.S. economy could prompt the Federal Reserve to act again and provide more stimulus. Since the Fed already slashed interest rates to the zero lower bound, it will need to resort to forward guidance and balance sheet related policies. The Fed already expanded its balance sheet to record levels at over $7 trillion by late May. However, the Fed may shift towards policies that will not require it to expand its balance sheet.

In the upcoming FOMC meeting, the Fed may hint of new steps it may introduce if the economy slumps. One policy it may consider is the yield curve control, or YCC. This policy of targeting Treasury yields at the backend of the curve could help lower short- and medium-term bond yields. So far, gold has benefited from low interest rates that are related to Fed’s policies on interest rates and quantitative easing. If the Fed were to hint of a YCC policy, this could provide backwind for the gold price and drive it to new highs.

The negative correlation between long-term bond yields and gold prices has remained stable and strong, as the chart below shows. As of July 2020, the linear correlation between the two was -0.51, indicating a significant and robust relationship between the two. As I have pointed out in the past, the negative correlation between long-term interest rates and the gold price has remained, for the most part, stable over the past few years.

Source of data: FRED, gold price (left) and 10-year Treasury bond yield

As for the Fed’s dual mandate of maximum employment and price stability, inflation remained well below 2% despite all of the Fed’s accommodating policies. And while unemployment fell to 11.1% (from 14.7% in April), it’s still high and may rise in the near term as more states shut down their economies. These economic conditions provide enough room for the Fed to introduce additional policies to combat the weakness in the U.S. economy.

Some reports show signs of recovery in physical demand for gold in China, as reported by the Economist. However, I think the main driving force of gold price isn’t physical demand for gold, but rather investors’ demand for gold. The data also support this assessment. A quick look at gold demand for Jewelry and Technology reveals that in 2019 it fell by 5% year over year, even as gold prices rose by 20%. Conversely, the demand for gold as an investment grew by over 9% year over year (see chart below).

Source of data: Gold.org, demand for gold on a sector basis in tonnes.

Moreover, since the start of 2020, only demand in the investment sector grew by 80% year over year, as presented in the following chart.

Source of data: Gold.org and Author’s calculations. Year-over-year change in demand for gold by sectors.

These findings suggest that even if the physical demand for gold in Asia were to keep recovering, it wouldn’t be enough to drive up the price of gold.

Another factor that could also provide backwind for gold is the weakening of the U.S. dollar. In the past, the linear correlation between the two was strong and negative. In 2018 and 2019, the correlation was around -0.6. However, in recent months, the correlation has weakened, as shown in the next chart.

Source of data: FRED and Author’s calculations. Linear correlation of gold and U.S. dollar, moving correlation over 24 months.

As the demand for U.S. assets grew in the first few months of the year, the U.S. dollar strengthened. However, this correlation could turn negative again, as the U.S. dollar has been losing ground in recent weeks due to loose monetary and fiscal policy along with the weakness of its economy. Moreover, if the Fed were to provide more stimulus or even hint of doing so, it could weaken the U.S. dollar and thus provide more support for gold prices.

Therefore, the main driver of gold will remain investors’ demand and how long-term interest rates and economic recovery progress. The optimism over a possible swift V-shape recovery appears too optimistic at this point. If the Federal Reserve is also worried about the recent developments in the U.S. economy, it may hint of possible new policies it could utilize in the near future as economic conditions worsen. If so, gold bulls are likely to see some additional gains.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.





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T. Rowe Price: Grow Wealthy With This Asset Manager (NASDAQ:TROW)


Every industry is susceptible to change, and the mutual fund industry is no different. Since the founding of Vanguard, passive investing has gained widespread popularity amongst investors, thereby taking share away from active portfolio managers. While this may be viewed as a negative by some in the mutual fund industry, I see it as a compelling force for the industry to rise up to the challenge and to find better ways to serve their clients.

While the risk of investment flows to passive funds will always be an overhang, there is a certain point at which too much passive investing can be bad for market efficiency. I believe there will always be a place for well-regarded asset managers such as the one I’m evaluating today, T. Rowe Price Group (NASDAQ:TROW). In this article, I intend to evaluate whether if the stock can make a good long-term investment, so let’s get started!

(Source: Wall Street Journal)

An Asset Manager With A Strong Track Record

T. Rowe Price Group is a leading asset manager that provides mutual funds, employer-sponsored retirement programs, and financial advisory services. It was founded in 1937, serves clients in 51 countries, and has over $1 Trillion in assets under management (AUM). It is best known for its actively managed mutual funds and currently offers 181 U.S. mutual funds across a spectrum of investment offerings in different asset categories, including stocks, bonds, blended, and target dated funds.

One of the risks facing active fund managers is the pressure from investors as they question the underperformance relative to indices and the higher fees (relative to passive funds), and competition from other asset managers. I see these risks as being mitigated by T. Rowe Price’s ability to differentiate itself with its scale, track record of outperformance, and reasonable fee structure. Morningstar, which is well-known for its comprehensive ratings on the mutual fund industry, shared this positive view of the company in its latest research report:

At the end of 2019, 75%, 80%, and 82% of the company’s funds were beating peers on a three-, five-, and 10-year basis, respectively, with 55% of funds rated 4 or 5 stars by Morningstar during the past five years, better than just about every other U.S.-based asset manager. T. Rowe Price also has a much stronger Morningstar Success Ratio – which evaluates whether a firm’s open-end funds deliver sustainable, peer-beating returns over longer periods – giving it an additional leg up.

While COVID-19 and the related market volatility have presented the firm with risks, I’m encouraged by the resiliency of the business model and the loyalty of the client base, as evidenced by the monthly increases in AUM that the company has reported since the end of March. As seen below, the firm’s AUM has increased every month since March and is now slightly above the December 2019 (pre-pandemic) level.

(Source: Created by author based on company press releases)

While some of the increase is undoubtedly related to the stock market’s performance over the past quarter, it also speaks to the stickiness of its client relationships, in which two-thirds of its AUM is tied to retirement accounts. I view this as a net positive, as retirement accounts are generally more stable due to the tax implications of early withdrawals. In addition, clients are less likely to switch retirement accounts to other asset managers, especially given T. Rowe Price’s performance track record, and the wide range of offerings provided by its platform. The notion of sticky client relationships is supported by a recent survey that T. Rowe Price conducted, which showed that 83% of 401(k) participants expressed interest in keeping their savings in their current employer plan upon retirement.

Turning to the financials, I’m impressed by the solid growth in revenues in recent years. As seen below, revenue has grown 7% for the trailing 12 months compared to the end of 2018. What’s also encouraging is that operating margin has held steady and even improved to 44.5% in the latest quarter. This suggests that fee-compression concerns have not affected the firm’s profitability.

(Source: Created by author based on company financials)

Next to the revenue growth, what’s perhaps the most attractive thing about T. Rowe Price is that it carries no debt. I see this as being a big plus, as this gives management more flexibility to weather difficult economic environments and reward shareholders. This is evidenced by management taking advantage of the low share price during Q1 by repurchasing a whopping 8.3 million shares. This represents a 3.4% share count reduction in one quarter alone to 228 million shares outstanding as of the end of March. I view the shareholder-friendly capital structure as being one of the key driving factors in creating shareholder wealth.

This shareholder-friendly structure combined with steady revenue growth has resulted in impressive EPS growth. As seen below, EPS grew at ~20% CAGR between 2017 and 2019. Dividend growth has also been impressive and the payout ratio remains safe at just 40% of trailing 12 months’ (TTM) earnings. While the TTM’s results have been affected by the market downturn during Q1, I see it as being more of a hiccup as the U.S. government has demonstrated its willingness to support businesses both big and small with stimulus measures and asset purchases.

(Source: Created by author)

Investor Takeaway

T. Rowe Price is a leading asset manager with a track record of having many actively-managed funds that have outperformed the broader market. It benefits from having sticky relationships with clients, who tend to stay with their current asset manager into retirement. While COVID-19 has presented the firm with challenges, I see it as being a bump in the road, as AUM has fully recovered to pre-pandemic levels. I also see the shareholder-friendly capital structure as being attractive, as it gave management the flexibility to repurchase a large amount of shares at low prices amidst the volatility.

I have a Buy rating on shares at the current price of $133.97 and PE ratio of 16.0. I have a price target of $150 per share, which I find reasonable given the company’s leadership position in its industry, track record of rewarding shareholders, and attractive balance sheet.

(Source: F.A.S.T. Graphs)

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in TROW over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.





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MTUM: Cracks Continue To Grow In Momentum Stocks (BATS:MTUM)


(Pexels)

Momentum investing is often touted as a key strategy that beats the market. It is true that, in general, stocks that have strong recent performance outperform the S&P 500 and other benchmarks. However, it is not true that this outperformance is consistent. In fact, when the market enters a reversal after a phase of strong momentum, it is often one of the worst-performing strategies. Evidence suggests we may be headed for such a period, not unlike that of 2000.

Of course, there are different approaches to momentum which all have different results. Let’s focus on the strategy running iShares popular Momentum ETF (BATS:MTUM). The fund tracks MSCI’s USA Momentum Index which invests in the highly liquid stocks with the best combination of 12- and 6-month performance. The fund also rebalances every six months.

This is among the most simple of momentum investing strategies since it focuses on longer-lasting trends. During a crash, defensive stocks will likely outperform giving them “momentum”. However, it is unlikely MTUM will buy such stocks until the market as a whole has reached a bottom. This is why the best results are usually found by combining momentum and value investing. When one strategy underperforms, the other usually shines.

Why Gravity is Pulling on Momentum

Still, the ongoing period of outperformance in momentum has reached an extreme. MTUM is full of extremely expensive (and often speculative) firms like Tesla (NASDAQ:TSLA), Netflix (NASDAQ:NFLX), and Amazon (NASDAQ:AMZN). This is not to say these are not “good companies,” only that their prices are detached from their fundamentals, largely due to the overwhelming popularity of performance chasing today.

Let’s say the fair value of these firms is like gravity. The further these stocks are from their fair value, the less it pulls them lower, and the more they can continue to trend higher. Indeed, TSLA over the past few months look as if it reached escape velocity, moving higher and higher in the face of no improved fundamentals.

Tesla is a red-flag for momentum considering the company actually managed to pull an impressive earnings beat and still declined over 10% in value since. While Tesla is an extreme example, I believe it is the canary in the coal mine for the peak of the current technology bubble.

Again, this is not to say much about technology companies or even their long-term potential viability. However, MTUM trades at a weighted-average “P/E” of 34X, meaning it would take 34 years of earnings to repay its total market capitalization – longer than it takes to pay most mortgages. Additionally, earnings are likely to be low this year and next due to the recession and most will likely have impaired growth for some time thereafter.

MTUM currently has very high weighting toward technology and healthcare companies which both constitute 31% of the fund. Most of these healthcare firms are drug makers that are in the COVID vaccine race. Many of these companies currently have irrational valuations as explained in-depth in “XBI: Not Everybody Can Be A Hero“. The same is true for technology as covered recently in “VGT: Irrational Exuberance Dominates The Technology Rally“.

Again, when a company’s price is detached from its fundamental value, it can easily rise much higher. Particularly if short-sellers enter the market only to have their position squeezed where they are forced to buy and cause the stock to rise even more. Because of this, a steep decline in short-selling can actually be a bearish signal.

Take a look at the change in percent short for the top eight companies in MTUM:

ChartData by YCharts

As you can see, there has been a considerable decline in short selling for all of these firms. Some say that a short-squeeze will push TSLA much higher, but the stock’s short sales as a percent of float of actually are at a seven-year low. The same is true for most firms in MTUM. Just about all of these firms’ short-sellers have now “lost their shorts”. Because of that, there may be a growing lack of buying liquidity in these stocks.

As stocks stop rising away from their fair value and then start accelerating toward it, positive momentum can very quickly become negative. Just look at technology stocks two decades ago or bitcoin three years ago to see.

Zooming Out on Momentum

As I mentioned earlier, momentum’s performance is far from consistent. It often sees periods of stark underperformance. Since MTUM’s inception, it has seen more outperformance than underperformance. This is illustrated below:

ChartData by YCharts

We can see the “momentum of momentum” much better by taking a total return ratio of MTUM to SPY and the Russell 2000 Small-Cap (IWM). Both charts are interesting, but I’d argue the MTUM/IWM ratio is better since IWM is driven by economic fundamentals more than speculation. See below:

ChartData by YCharts

Here we can see that momentum underperformed in late 2016 and early 2017 following the election of Trump. This period was dominated by what was then called the “reflation trade” which saw the outperformance of financials and other more downtrodden “value” sectors. The 2018-2019 slowdown also saw momentum underperform perhaps due to profit-taking on expensive stocks.

Let’s zoom in on today:

ChartData by YCharts

While the stocks in MTUM have had a lot of coverage lately, the momentum strategy has actually not been too great since the March bottom. It has had periods of outperformance but has generally failed to break above resistance levels. In fact, the MTUM/IWM ratio has rejected resistance about six times, which is a clear signal that small-caps are favorable to momentum stocks (for those looking for outperformance).

Looking Forward

In my opinion, these charts, the fundamentals of MTUM’s holdings, and the recent red-flags in TSLA and NFLX post-earnings performance are signals that the momentum strategy is reaching a peak, which is likely to be followed by underperformance.

I believe this will be a longer-lasting period of underperformance than in 2016 and 2018. It is difficult to say its magnitude since MTUM’s holdings change every six months. However, it could be a few years as MTUM selects stocks likely to underperform today and then picks defensive equities toward the market bottom. If correct, this should bring about 12-18 months of underperformance.

In my opinion, this makes MTUM a solid tactical short opportunity. I am bearish on most equities, but I believe MTUM offers the most total downside risk among ETFs that are highly correlated to the S&P 500. For the most tactical of investors, I believe the MTUM short can be paired with a value ETF like VTV which makes for a market-neutral alpha opportunity. The past performance of such a trade is illustrated below:

ChartData by YCharts

Personally, I believe the recent decline in this chart implies it has reached its long-term bottom and is due for an aggressive rebound.

I’ll be keeping a close eye on MTUM and its constituents over the coming weeks. Please follow my account if you’d like to stay in the loop.

Interested In More Alternative Insights?

If you’re looking for (much) more research, I run the Core-Satellite Dossier here on Seeking Alpha. The marketplace service provides an array of in-depth portfolios as well as weekly commodity and economic research reports. Additionally, we provide actionable investment and trade ideas designed to give you an edge on the crowd.

As an added benefit, we’re allowing each new member one exclusive pick where they can have us provide in-depth research on any company or ETF they’d like. You can learn about what we can do for you here.

Disclosure: I am/we are short TSLA, AAPL, NFLX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.





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Snap stock drops in late trading as losses grow, but sales and users continue to increase


Snap Inc.’s losses widened in the second quarter as Snapchat’s parent company dealt with the effects of the COVID-19 pandemic, sending shares lower in after-hours trading Tuesday afternoon.

Snap
SNAP,
-2.09%

shares were down 10% immediately after the report was released Tuesday. The company said it lost $326 million, or 23 cents a share, compared with a loss of $255.2 million, or 19 cents a share, in the year-ago quarter. After adjusting for stock-based compensation and other factors, Snap reported a loss of $95.6, or 9 cents a share, compared with an adjusted loss of $78.7 million, or 6 cents a share a year ago.

Revenue improved 17% to $454 million from $388 million a year ago. The company declined to project what its results could be for the third quarter.

Analysts surveyed by FactSet had expected adjusted an adjusted loss of 9 cents a share on sales of $442 million.

Daily active users, an important measure of the service’s popularity, improved 17% to 238 million, roughly in line with the average analyst forecast of 238.5 million. Snap said that users increased from the previous quarter and the previous year in all of its geographies.

“We are grateful that the resilience of our business has allowed us to remain focused on our future growth and opportunity,” Snap Chief Executive Evan Spiegel said in a statement announcing the quarterly results.

Snap is expected to continue to benefit, like Facebook Inc.
FB,
-1.49%

, from a return of advertisers in the second half of the year. Digital media platforms, in particular, are the most likely destination spot for brands in place of billboards and traditional channels like linear TV, according to Wall Street analysts.

Snap is most frequently mentioned as a “share gainer outside the duopoly” of Facebook and Google parent Alphabet Inc.
GOOGL,
-0.50%

GOOG,
-0.46%
,
Loop Capital Markets analyst Rob Sanderson said in a July 20 note.

“We conducted scenario analyses that show the potential for double-digit stock returns over the next three years, with potentially 20%+ returns for Snap,” Jefferies analyst Brent Thill added in a July 13 note that maintained an overweight rating on Snap shares, and raised its price target to $30 from $20.

In a July 15 note, J.P. Morgan analyst Doug Anmuth picked Snap and Facebook as the most promising stocks, followed by Alphabet, Pinterest Inc.
PINS,
-1.38%

and Twitter Inc.
TWTR,
-0.13%

. Anmuth maintained an overweight rating on Snap’s stock, and raised his price target to $28 from $22

Snap’s shares have improved 52% this year. The broader S&P 500 index
SPX,
+0.16%

is up 0.7% in 2020.



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Antares Continues To Quietly Grow Revenue (NASDAQ:ATRS)


Antares Pharma (ATRS) is a long-term position for me, and I continue to believe the company is substantially undervalued due to its strong injector technology platform and increasing sales. In my view, the stock is largely de-risked, yet has good upside potential here. While Antares has rallied some since my last article was published, the news since then has been all good, meaning the stock continues to look like a bargain. In this article, I give a brief recap of my previous article, discuss how things have been going for Antares since, and provide an update to my valuation modeling.

Overview of My Prior Article

My prior article on Antares was published on April 3, 2020, just a few weeks into the COVID-19 pandemic for most of the country. At that time, I noted that Antares had become cash-flow positive in Q4 2019. This was largely due to increasing Xyosted sales, which were about $22 million in 2019, as well as Teva’s generic epinephrine autoinjector hitting the market.

I noted Makena’s uncertain status after an FDA advisory committee voted to recommend its withdrawal from the market, but that any lost revenue from Makena should be more than made up for by continued increases in Xyosted sales, as well as generic versions of Forteo and Byetta hopefully hitting the market soon. I also discussed how Antares’ additional two proprietary pipeline assets, as well as partnerships with Idorsia (OTCPK:IDRSF) and Pfizer (PFE) for injector-based products, are a productive use of the company’s increasing levels of cash flow.

About three quarters of the roughly $2 price of an Antares share was justified by the value of Xyosted and Otrexup alone, which, by my calculation, were worth at least $1.47 using very conservative assumptions. My combined estimate of Antares’ present value was $3.03 per share, again based on very conservative assumptions like Makena immediately being pulled from the market.

Antares has Maintained Momentum During the Pandemic

Since April, Antares has rallied in the neighborhood of 20%, now trading between $2.50 and $3.00 for the last month after briefly getting up as high as about $3.50.

Figure 1: Antares Stock Chart

(Source: Finviz)

The biggest change for Antares since early April is that it released its Q1 2020 financial results. I strongly assume that much of the March sell-off was over fears that the COVID-19 pandemic would greatly slow the Xyosted ramp-up. Thankfully, this does not seem to have been the case. Antares reported a 42% overall year-over-year revenue increase and just over $9 million in Xyosted sales in Q1. This number for Xyosted is up from just $703k in Q1 2019 and what I estimate to have been $7.7 million in sales based off of about 28k prescriptions sold in Q4 2019.

Figure 2: Xyosted Prescription Growth Chart

(Source: Corporate Presentation)

On top of growth in Q1, Xyosted uptake appears to have increased overall in Q2 even with headwinds from the pandemic. As you can see from Figure 2, prescription growth slowed in April and even contracted a bit in May, but June numbers should show a return to growth based on the prescription estimates I’ve seen. Despite the ups and downs, the 4-week moving average of prescriptions per week went from about 2,700 per week at the end of Q1 to about 2,900 per week at the end of Q2.

Antares booked about $274.31 in revenue per prescription of Xyosted in Q1 by my calculations. Based on prescription data for Q2, the company would be expected to have close to $10.3 million in Xyosted revenue off approximately 37,500 total prescriptions. If growth sticks to the roughly 1% week-over-week figure from the last few quarters, full-year Xyosted revenue would likely be around $42 million. I wouldn’t be shocked to see a number higher than that, but I’m not modeling anything higher for now given the persistent effects we could see from the ongoing pandemic.

Figure 3: Epinephrine Prescription Chart

(Source: Corporate Presentation)

Teva’s generic epi-pen growth is more than making up for drop-off in Makena. Market share for Teva’s epi-pen appears to have increased this year up to about 40-45% of the total epinephrine market. It’s also still unclear that Makena will even be pulled from the market given that there are no other potential options to address premature births, so there may not be much of a further drop-off from here in the near term at least. The FDA has been very slow to act, and several researchers and clinicians have spoken out in favor of keeping Makena on the market while further research continues.

In total, Antares reported about $20 million in partnered product sales, royalties, and licensing revenues for Q1, which annualizes to $80 million with no contribution from either generic Forteo or Byetta, which may be approved later this year. This also doesn’t factor in a potential pick-up in sales for Makena if some of the uncertainty clears later this year.

Antares Still Looks Strongly Undervalued

Antares is trading just under a $450 million market cap, which is roughly equivalent to the highest peak sales estimate for Xyosted I’ve seen and only about 2.25x a much more conservative $200 million peak sales estimate.

Figure 4: Antares Revenue and Earnings Estimates

(Source: Seeking Alpha)

As you can see from Figure 4, analysts still seem to be pricing in peak sales somewhere in between, with the highest revenue estimate for any year being $362 million in 2028. This seems like it could be conservative even with just currently approved products and generic Forteo/Byetta, but it certainly should prove conservative if either the Pfizer rescue pen or Idorsia’s selatogrel pen make it to market. Before updating my discounted cash flow model, I discounted these revenue and earnings estimates to get a sense of the general ballpark I would expect the present value to be in.

Figure 5: Antares Present Value Estimates

(Source: Revenue and sales estimates from Seeking Alpha and my calculations based on them)

As you can see from Figure 5, a rough estimate of present value using a 10% discount rate as applied to these conservative sales and earnings estimates produces a present value somewhere in range between high $4/share and mid-$5/share.

From there, I updated the discounted cash flow model I described in my prior article. The biggest differences were adjusting slightly downward my projected Xyosted sales for 2020-2024 given the additional information we now have on the pandemic’s impact and adjusting upward my estimates for partnered product sales and royalties given that it looks unlikely that Makena will be immediately removed from the market. Despite adjusting down my projected Xyosted sales, I left the eventual peak unchanged at $200 million in 2025.

Additionally, Antares’ cash pile actually increased in Q1, going from $45.7 million to $50.3 million, so I still don’t model in an additional cash raise as being necessary. The company’s long-term debt is only $45.7 million that doesn’t mature until 2022, and most of the cost of developing its pipeline is currently borne by its commercial partners.

As a reminder, my model is just for the next 10 years, and I don’t factor in any potential revenue impact from the Idorsia or Pfizer partnerships. I do factor in $10 million in additional revenue from Forteo/Byetta next year and $20 million per year starting in 2022. I discount the resulting yearly cash flows by 10% per year, and I subtract out estimated expenses based on Antares’ current annualized rate around $80 million. I don’t view expenses as a major issue for the company given that its nearest-term pipeline assets are being developed and commercialized by partners, leaving the biggest expense as just Xyosted commercialization.

Figure 6: Results of my Discounted Cash Flow Analysis

(Source: Antares’ Q1 report and my calculations based on it)

As you can see from Figure 6, my analysis shows a net present value of $4.79 per share, squarely within the range of what I generated from discounted analyst estimates above. Based on this, I still feel very confident in holding a full position in Antares for the long term.

Conclusion

My Antares position has started to bear fruit this quarter as the share price has recovered some from its March lows. Recent news from the company suggests continued upside to come as the Xyosted roll-out continues and more partnered products come to market. Antares offers a good risk/reward for both short- and long-term investors at present.

Disclosure: I am/we are long ATRS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I’m not a registered investment advisor. Despite that I strive to provide the most accurate information, I neither guarantee the accuracy nor the timeliness. Past performance does NOT guarantee future results. I reserve the right to make any investment decision for myself without notification. The thesis that I presented may change anytime due to the changing nature of information itself. Investment in stocks and options can result in a loss of capital. The information presented should NOT be construed as a recommendation to buy or sell any form of security. My articles are best utilized as educational and informational materials to assist investors in your own due diligence process. You are expected to perform your own due diligence and take responsibility for your actions. You should also consult with your own financial advisor for specific guidance, as financial circumstances are individualized.





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