Monday, February 14, 2011

MannKind Corporation (NASDAQ: MNKD) Q1 2011 Analysis

Recent price: 3.79$
P/E Ratio: -
3 months Target Price: 7.00$

Company Description
MannKind Corporation (Nasdaq:MNKD) is a biopharmaceutical company that focuses on the discovery, development and commercialization of therapeutic products for diseases such as diabetes and cancer. Their lead investigational product candidate, AFREZZA® , is an ultra rapid-acting insulin. AFREZZA is in late stage clinical investigation for the treatment of adults with type 1 or type 2 diabetes for the control of hyperglycemia.

Confidence Margins
Strong resistance $10.05 (+165%)
Light resistance $7.20 (+90%)
Light support $3.76 (-1%)
Strong support $3.00 (-21%)

This company showed poor financial results for the 4th quarter and also they received a very disappointing reply from the FDA provided concerning their flagship AFREZZA drug. They came really short of analysts expectations but this seems to be a great occasion to accumulate common stock in this company. Call option contracts also seem to be undervalued for this company.

Entry strategy
For the cautious investor:
At the time of writing, it is suggested to initiatiate a long position. Keep in mind however that one should buy the stock for 4.00$ or less.

For the risk-taking trader:
The May 2011 5$ call option contract seems to be the right position to take, they can be acquired for 15$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 7.00$, or keep it until 9.00$ if the stock crosses the light resistance level.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 7.00$, as for the cautious investor.

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