Lioness Associates, Inc.

Economic & Corporate Risk/Yield Reports

August 10, 2012 - Arena Pharmaceuticals (ARNA) Risk/Yield Update for 2012

The previous write-up dated June 21, 2012 (below) indicated that a peak was likely to occur with this stock at about the July 1st period as per the ARNA IPO 2012 Delta Core/Transient graph. 

This stock closed on May 15, 2012 at 6.06 with a close on July 2, 2012 of 9.95.  The year high of 13.50 (so far) has occurred on June 27.  Since July 10th, the stock price has been declining and on August 10th had a close of 7.27.  This seems to be similar to what the ARNA IPO 2012 Delta Core/Transient graph portrayed at the last discussion of this stock.

Looking out further and based on the ARNA 2012 Risk/Yield graph, the period August through December has a higher level of risk factors than yield and as shown in the ARNA 2012 Delta Core/Transient graph, the Core moves into risk in August and stays there through most of the rest of the 2012 year.  This does not necessarily mean that the stock price will keep on decreasing - the decreases (as also the increases) tend to happen on the momentum moves.  In many cases, the first part of a move is the most dramatic.  Also, later this year the USA economy is likely to rebound which might push this stock higher.  

Note, updated graphs have been provided for this write-up as the graph algorithms have had a minor modification (new version). 


June 21, 2012  -- Arena Pharmaceuticals Risk/Yield 2012

Arena Pharmaceuticals has an obesity drug (see article) waiting on further news.  The company's stock price has climbed dramatically in the past few months -- from 2.34 on May 1, 2012 to 10.50 on June 20, 2012.  Consider also that this stock has already surpassed the 1 year target of 6.88 noted on 6/21/2012 at yahoo finance web site.  Having said that, there can be a significant upside with new drugs.

The ARNA Delta Core/Transient 2012 graph does have a nice peak at the July period but, since the data points are measured twice a month - the actual point could be as early as the third week in June or as late as the first week in July - either way, the yield momentum has already been taking place and there would be some questions as to whether the stock price had "more room to run".  There is a transient peak (line in green) taking place around the beginning of August which could signify more interest or more news on the matter but, the core (black line) dips into Risk during that period.  

The ARNA Risk/Yield 2012 graph does indicate more Yield data points during the June/July 2012 period with few Risk Data points during that period. 

We'll check back at the beginning of August.

          ARNA Delta Core/Transient 2012 graph

          ARNA Risk/Yield 2012 graph

Disclosure as of 6/21/2012 - Arena Pharmaceuticals (ARNA) is not part of our portfolio at this time.