Connetics (NASDAQ:CNCT) is a specialty pharmaceutical company that develops and commercializes products for the dermatology marketplace. The company's primary goal is to bring dermatological treatments to market, particularly those for acne and psoriasis. Connetics has branded its foam drug delivery vehicle VersaFoam and promotes the clinically proven therapeutic advantages of its many products. It has one New Drug Application under review by the Food and Drug Administration and one product candidate in Phase III clinical trials.
We originally published this issue as a "Supplemental Position" but after reviewing the company's fundamental outlook, we believe it would be a favorable portfolio holding for conservative investors. In addition, the near-term trend has turned "bullish" in the wake of a recent supply and marketing agreement with Ventiv Health (NASDAQ:VTIV), which is expected to add $5 - $6 million to its revenue in 2005. The stock also enjoyed some attention after the CEO outlined the company's long-term goals and product pipeline at Connetics' annual Analyst and Investor Day. Now the issue is back in a previous "comfort zone" near $27 and barring any disastrous news in the quarterly earnings report, the share price should remain above the cost basis ($24.50) in this position for the next month.
Fundamentals Chart Earnings Dates Analyst Ratings
Suggested (Bullish) Option Position:
Sell Put MAY 25.00 UXU-QE
Target Price = $0.50 Open Interest = 40
Potential Profit (5 contracts @ $0.50) = $250
Initial Margin (5 contracts) = $4,435
Return on Investment (max) = 5.0%
Cost Basis in Stock = $24.50
Days to Expiration = 34