In the novel "Wild Life" by Richard Ford, Warren Miller, the richest businessman in a town in Montana, observed that, You get rich from other people's mistakes. The recent fall in the share price of Mannkind (NADAQ: MNKD) is one such opportunity.
Mannkind shares fell after it filed to sell $500 million in preferred stock, warranties, and debt securities. That is a huge show of strength for the diabetes drug developer operating in the biotech sector along with Amgen (NASDAQ: AMGN) and Arena Pharmaceuticals (NASDAQ: ARNA). As uber financier Mike Milken has pointed out, the capital structure is very important for a company in rewarding investors.
For a small cap like Mannkind, with a market capitalization of $486.89 million, to be able to move forward with such a sizable offering is impressive in itself. Companies do not register to fail. That is even more punishing for the share price, which does no one any good.
Mannkind would not have gone to the time and expense of the registration statement if it was not confident. It has double digit ownership from institutional investors, so it is likely that a good read was obtained from them first. Institutional investors such as mutual funds and pension groups are very active in discussing the future of the company with its management, particularly in new offers that could be construed as diluting the value of existing shareholders.
What is also bullish is the trend of the earnings-per-share growth. Many times, there will be over confident analysts projecting what just will not happen. But Mannkind is enjoying earnings-per-share growth of 37.39% this quarter. For the year, earnings-per-share growth is rising by 12.012%. Next year, it is expected to rise by another 45.70%. That is a very bullish trend for Mankind.
And, as the saying goes on Wall Street, don't fight the trend!
Now trading around $2.44 a share, the mean analyst target price for Mankind is $6.25 over the next year of market action. Mannkind is also presenting at several very impressive industry events this month, so the share price should recover from those. That often happens as analysts become more bullish after interacting with the company management at the events.
http://www.smallcapnetwork.com/500-Million-Reasons-to-Bet-on-the-Future-of-Mannkind-MNKD-ARNA-AMGN/s/via/3420/article/view/p/mid/1/id/1301/
