Chardan Capital analysts are weighing in today on satellite company Globalstar, Inc. (NYSEMKT:GSAT) and drug maker Lion Biotechnologies Inc (NASDAQ:LBIO), as both stocks turned extremely volatile on the back of negative FCC voting and fund rising/new CEO announcement, respectively. Let’s take a closer look.
Shareholders of Globalstar are having a rough day as the company’s stock is down over 60% following the news that two members of the Federal Communications Commission had voted against FCC Chairman Tom Wheeler’s proposal to allow the company to offer mobile broadband service on frequencies currently reserved for satellite signals.
Chardan analyst James McIlree commented, “This is clearly negative for the company, since it needs three votes of the five member commission for the order to pass […] Time is not the company’s friend. Liquidity is adequate for the year but starts to get much tighter next year. The company needs $62 million this year, $33 million for debt service, $22 million for interest payments and $7 million for the final stages of the second-generation ground upgrade. The company has $12 million in cash, an estimated $25 million in EBIDTA and $53.5 million available on an equity purchase agreement with Terrapin. However, in 2017 the company needs almost $118 million for debt service and interest payments. This leaves a funding gap of about $52 million next year. Unless the cash flow from the constellation increases substantially there will be funding gaps of $40 to $70 million annually through 2020.”
Chardan rates Globalstar shares a Buy, with a price target of $6.00, which implies an upside of 626% from current levels.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst James McIlree has a yearly average return of -5.0% and a 42% success rate. McIlree has a 18.5% average return when recommending GSAT, and is ranked #3339 out of 3986 analysts.
Lion Biotechnologies Inc
Lion Biotechnologies shares rose 35% today following the news that a group of investors has entered into a securities purchase agreement to purchase approximately $100 million of stock in a private placement. With the offering, Dr. Maria Fardis will become CEO.
Chardan’s healthcare analyst Gbola Amusa commented, “We find the series of announcements significant positives, given: 1) the lack of visibility previously on LBIO’s differentiated and under-appreciated business, per our Investment Summary; and 2) the experience and tangible evidence of success of the new team. Indeed, commercial and financial risks to us have been significantly improved.”
“We have previously had concerns on the lack of visibility on LBIO assets. (For example, LBIO does not have presentations at ASCO 2016, despite the growing body of evidence of the importance of TILs in solid tumors, and LBIO’s presence as the only public TILs company due to its exclusive NCI licenses.) With new management, we expect a better record of execution and communication for LBIO going forward,” the analyst added.
According to TipRanks.com, analyst Gbola Amusa has a yearly average return of -5.9% and a 42% success rate. Amusa has a -31.3% average return when recommending LBIO, and is ranked #3631 out of 3986 analysts.
As of this writing, all the 5 analysts polled by TipRanks rate Lion Biotechnologies stock a Buy. With a return potential of 118%, the stock’s consensus target price stands at $18.25.