Why Nordion Shares Popped
Jan 28th 2013 2:07PM
Updated Jan 28th 2013 3:45PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of medical isotope supplier Nordion shot higher by as much as 15% after reporting its fourth-quarter earnings results and announcing the start of a strategic review that could end in a sale of the company.
So what: For the quarter, Nordion recorded a one-time laden loss of $0.70 per share as revenue remained flat at $74.7 million. Adjusted for one-time costs, the company earned a profit of $0.34, up 13% from last year, but also cautioned that isotope sales are expected to dip 20% this year. The big news was Nordion's hiring of Jefferies to help with its strategic review -- a fancy phrase for, "Can we sell this company to increase shareholder value?" The reason for doing this relates to a lawsuit it lost in September that would have recouped damages from its main isotope supplier, the Atomic Energy of Canada, or ACEL. ACEL provides Nordion with molybdenum-99, a medical imaging isotope, and beyond contracts that expire in 2016, Nordion's supply of this isotope and its operations in general, are very much up in the air.
Now what: Danger, Will Robinson, danger! How many times have we had this discussion of a company seeking a potential buyer when it comes onto hard times? Nordion gave you all the clues you need with its earnings report: 20% decline in isotope revenue in 2013. Its moly-99 supply issues are only going to get worse which is going to make a sale of the company very difficult. Personally, I'll be perfectly happy watching Nordion from the sidelines.
Craving more input? Start by adding Nordion to your free and personalized watchlist so you can keep up on the latest news with the company.
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