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eResearch Technology (NASDAQ: ERES)
Rumors abound on Wall Street trading
desks about eResearch Technologies. Traders are talking about
a potential short squeeze. Recently upgraded to strong buy by both Raymond
James and Roth Capital, the stock has come off a short term bottom of $11,
and rebounded to about $15.
eResearch is a leading provider
of centralized electrocardiograph collection and interpretation services,
which includes managing clinical trials on behalf of client companies.
Their customer base includes such high profile names as Johnson & Johnson,
Pfizer, Aventis, Novartis, GlaxoSmithKline and 3M Pharmaceuticals.
The company has increased revenues
for the first nine months of 2002 at a 45.5% clip, generating $29.4
million in revenues versus just $20.2 million for the same 2001 period.
It has also reported net income of $3.2 million, or $0.29 per diluted share,
versus a net loss of $100,000 or $0.01 per share for the same period in
the prior year.
The company also announced it expects
to post fourth quarter results of at least $11.1 million in revenue and
$0.12 per share in diluted EPS. The company has exceeded its guidance every
quarter this year. The company has said it expects to report at least $53
million in revenue and EPS of at least $0.62 in 2003.
According to the information found
at the Yahoo! quote page, the reported short position on this stock is
50% of the public float, pegged at three million shares.
Trader buzz on this stock claims
a powerful short squeeze is in the making, and many are expecting substantial
fundamental developments coming out of the company this month.
Based on the company's fundamental
performance combined with the rumors of the short squeeze, we believe this
stock is definitely worth a trade and possibly a long term investment.
Unfortunately, there are no options available on this stock, so you have
to trade the common shares.
We would recommend the following:
Buy up to $16, and if
the stock gaps open in the morning you might want to wait for a pullback.
Stop Loss- $14, or whatever
percentage of your principal you are willing to risk based on your personal
Target Price- $23 in December.
Critical levels- a break through $16.50 would be very bullish. A break
through $19.50 would make the $23 price target more realistic. If the stock
challenges $19 for the fourth time this year, and cannot get through that
level, it would probably be a good time to take your profits.
Quick Note- Before
deciding if you want to participate, please read the OTC Journal's section
on Trading Alerts
found on the left hand menu bar of our home page. For a Track Record of
former Trading Alerts, Click
We inform you that one of our editors
has purchased 500 shares in the open market at $15.70. Our editor can buy
or sell shares in this stock at his own discretion. This should be viewed
as a potential conflict of interest.
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