However, the FDA only granted an 'approvable' letter on May 9, 2007.
Once again, the fate of Provenge will be dependent on the ongoing IMPACT phase III trial. Positive interim results from the trial in the second half of 2008 will enable the compay to amend the BLA [biologics license application] filing for Provenge. Therefore, we maintain our Hold rating on the shares of Dendreon with a price target of $5.00.
Our target price assumes the shares show a decent appreciation over the next several months. We come at this price by using a P/S ratio of 4.2x, times our estimated revenue of $170.1 million in 2010, discounted at 30% for two years.
Lionbridge: Not Much Downside Left
Lionbridge Technologies, Inc. (LIOX) reported stronger-than-expected revenues in the fourth quarter, primarily due to strong revenues from large existing accounts, including Google (GOOG). The weak dollar wreaked havoc during the quarter, as G&A expenses were higher by an additional $3.5 million, which were partly due to higher rent on new premises in India.
The company has embarked on a cost-cutting initiative by closing down high-cost facilities in New York and Germany, and has formulated a strategy to try and counter currency fluctuations going forward. The company has guided slightly increased revenues but lower earnings for 2008.
The company has targeted 25% of incremental revenues to come from new clients in 2008, with the remaining 75% coming from enhanced relationships from existing clients, which we view as aggressive given the current market conditions. We are concerned about an economic slowdown and start-up costs associated with opening new locations, which has been a drag on profitability.
We are also concerned about the fact that the company's board of directors authorized a $12 million share buy-back program, which should help maintain the company's stock price over the next several months. While the buy-back is good for the stock in the near term, we are concerned that the company is willing to spend slightly less than half its cash on its own stock instead of concentrating on re-investing the cash to build its business or retiring long-term debt.
However, we believe that there is not much downside to the stock after it has steadily sunk to its current level from May 2007. We now expect the stock to trade sideways from here and sell at between 24.2x to 24.4x our adjusted 2008 EPS estimate, or $3.40 per share over the next six months. We rate LIOX a Hold.
Volume Issues at Silgan Holdings
Silgan Holdings, Inc. (SLGN) reported fourth quarter EPS of $0.55, down 16.7% year-over-year due to difficult year-over-year comps and the negative lag effect of recovering resin price increases that occurred late in Q407.
