MEDI’s Dreadful Quarter

One More Drop and We’ll Take Profits

By Bryan Bottarelli
Thursday, July 20, 2006 1:59 PM EST
Thu, 20 Jul 2006 18:59:00 GMT

Dear Bottarelli Research Member,

It’s painfully clear why we’re holding put options on MedImmune (MEDI – NASDAQ).

This morning, the Gaithersburg, Maryland biotech said that their net loss increased to $63 million, up significantly from their loss of $44 million a year ago. On a whole, their revenues fell from $88 million down to $73 million — primarily because sales of RSV drug Synagis fell to $33 million from $51 million. When you consider this was a drug that generated more than $1 billion in 2005, you can see why MEDI is a candidate for continuing losses.

MEDI

According to the company, they’ve taken “significant steps" to rejuvenate Synagis and help launch a new form of FluMist, but their turnaround plan will definitely take time. Until Wall Street received proof that their plan is working, I feel the stock will remain weak — as highlighted by today’s new 52-week low at $25.33.

As I write, the MEDI August 27.5 Puts (MEQ TY) that we bought for $2.25 on Monday trade between $2.30 and $2.40. If MEDI breaks below its near-term support level right around $25.40, we could see a series of subsequent new lows, which would (or course) lead to a quick “take profits” alert. So stay tuned! Until then…

Lock and load

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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