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   Biotech / MedicalOcular Sciences (OCLR)


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To: Alan Villalon who wrote (16)6/11/1999 10:13:00 PM
From: EyeDrMike
   of 36
 
Clueless Investor


Did fear beat up Ocular Sciences?

By Barbara C. Costanza, CBS MarketWatch
Last Update: 2:23 PM ET Jun 11, 1999 Earnings Surprise
Short Takes

NEW YORK (CBS.MW) -- Investors dumped shares of Ocular Sciences after the contact lens company warned of an earnings shortfall. Afterwards, analysts thought they were near-sighted.



The warning

The company (OCLR: news, msgs) warned that soft U.S. sales of its contact lenses could push earnings as much as 20 percent below analysts' expectations for the second half of the year.

The sluggish performance will cut sales by 5 percent and earnings by 10 percent in the second half of the year, said CEO Norwick Goodspeed. "Optical trends are lagging the [strong] retail trends," Goodspeed said, adding he had "no idea" why that is true. Further, he said earnings could be clipped by another 10 percent due to increased pricing pressure. See full story.

The stock dropped 4 3/4 to 14 7/8 after Wednesday's warning.

Reaction vs. reality

As analysts raced in to cut estimates, investors raced out to dump the stock. However, those same analysts believe the stock is extraordinarily cheap for several good reasons.


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CBS MarketWatch Columns
Updated:
6/11/99 5:18:14 PM ET




"Lordy lordy. Fear beat the pulp out of greed in the last few days on OCLR," noted Robert Faulkner and Chris H. Shibutani, analysts at Hambrecht & Quist. Faulkner and Shibutani concede that competition has become tight and growth has come to a halt. However, the analysts stated the company is clearly neither going out of business nor going unprofitable, and management's business execution is strong.

Take a look at the fundamentals. Revenue along with earnings has increased year-over-year since 1997. In difficult periods or a slowdown in a company's growth long-term debt can add to potential problems. But take a look at Ocular's long-term debt, it accounts for about 1 percent of the company's capital.

Look at the company's balance sheet for fiscal 1999. The company reported cash, cash equivalents and investments of about $54.7 million, with total assets of $186.1 million and total debt of $3.37 million.

SG Cowen's analyst Michael G. Mullen lower his earnings estimate for fiscal 2000 to $1.90 from $2.10 a share. However, Mullen noted he has confidence in the company's growth over the long term.

Robert W. Baird's analyst Suey Wong believes the investment is risky but the stock offers greater upside potential than downside risk. The firm cut its estimates to $1.50 and $1.80 for fiscal 1999 and 2000, from $1.70 and $2.20, respectively.

Bear Stearns analyst Rick Wise cut his estimate for 1999 to $1.50 from $1.73 and fiscal 2000 to $1.80 from $2.15 a share. In research notes,Wise said the stock may tread water for a while but stands pat on his "buy" rating.

Shares finished Friday up 5/16 at 16 1/8.


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To: EyeDrMike who wrote (17)6/15/1999 11:15:00 AM
From: Alan Villalon
   of 36
 
Short term and day traders are always near sighted.

The article just confirms what I said in my previous post. People reacted too hastily once they fear that momentum will dissipate. One of the things I also liked when looking at OCLR was their long term debt. I usually pick companies with very little long term debt because they can 1. take on debt in the future to fuel more growth 2. look more attractive in M&A deals 3. no interest payments on debt so there is little influence on earnings.

We have probably seen the last of investors like Dragonpawn in OCLR. If management does the right things, the people who will benefit the most are the long term investor.

Remember, long term and patient investors always benefit the most over time. In the era of day trading, people have forgotten to invest like the Buffet's and Peter Lynch's. Buy to own a company! Just my style, I prefer to know that I invested in an solid company and get more sleep at night rather than toss and turn at every earnings announcement and press release. People forget that it is natural for every facet of life to have its ups and downs.

Just my 2 cents worth....

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To: EyeDrMike who wrote (17)1/20/2000 12:37:00 PM
From: Nanchate
   of 36
 
Major Technical Breakout on OCLR today.
Broke a triple top at $20 (actually topped there 5x in the past) by printing $21, and broke a double top by printing $22. Technically looking very good and a safe buy here on the breakout IMO.

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To: Nanchate who wrote (19)1/20/2000 12:38:00 PM
From: EyeDrMike
   of 36
 
looks good, new deals end of 1999, and so much demand, they cant keep up.

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To: EyeDrMike who wrote (20)4/10/2000 10:18:00 AM
From: SIer formerly known as Joe B.
   of 36
 
Still holding?

I bot a little this morning.

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To: SIer formerly known as Joe B. who wrote (21)5/7/2000 1:18:00 AM
From: Fred McCutcheon
   of 36
 
Wessley Jennsen has got its clearance from anti trust for the merger which should push OCLR up to the $27 level if the market sees the deal as going through. If not, a growth rate of 15+% should merit a lot more than 11x trailing earnings.

Clearly I am missing something. Can anyone help??

Fred McCutcheon

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To: Fred McCutcheon who wrote (22)5/14/2000 8:02:00 PM
From: Manish Aurora
   of 36
 
The stock is generating plenty of excitement. Wesley Jesson will likely pay in the low 20's for it soon, not perhaps the $27 you are looking for. Rumor has it (and rumors on Wall St. are often true:-)) that the combination will ask Alcon to be a white knight and prevent a takeover by Bausch & Lomb. For a full story try rationalinvesting.com

The stock makes 1.20/share and trades in the mid teens, so I agree it is a bit of a value anyway. Anyone else hear anything?

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To: Manish Aurora who wrote (23)6/4/2000 2:33:00 AM
From: Paul Senior
   of 36
 
Anyone here adding to their position in OCLR now?

The way I see it: WJCO was willing to pay about $18 in stock. With the termination, OCLR's $25M gives OCLR roughly another $1 sh (before any taxes)on the balance sheet. With OCLR's stock at about 13 5/8, maybe OCLR is worth $19? Given the consolidation in the industry and OCLR's niche in it, is the future still bright for OCLR?

Paul Senior,
Seeking information/opinions. I have no position in this stock.

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To: Paul Senior who wrote (24)6/10/2000 12:22:00 AM
From: RWReeves
   of 36
 
Yep, been trading OCLR for the last year. Seems like nobody cares about the Earnings or "last independent C/L business" position. Well, except other C/L companies. Their lenses are pretty popular with OD's as they are not out doing naughty things like SOME C/L companies ( like selling through mail order). I bought mine when the fire sale was on at the 11's and let go when it had nowhere to go but down. I am back nibbling in the 12-13 range, it is still a good munch candidate but patience is required and leading the market can be tricky with this one. Not paying more than 13 though.

RWR

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To: RWReeves who wrote (25)6/10/2000 2:21:00 PM
From: Paul Senior
   of 36
 
Thanks, RWR. Appreciate the opinion. I'll continue to monitor the stock.

Paul Senior

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