Email – #412

As I mentioned a couple of days ago, we had two of our companies report quarterly earnings and future guidance yesterday.

First up, let’s deal with Mylan (NYSE: MYL)…

The company reported good numbers that were above analyst expectations. However, its guidance was subdued by the poor performance of one of its drugs. Going forward, this will have an impact on earnings. However, the recent acquisitions of Merck AG and Matrix are gong to have better than expected contributions in the coming quarters, as it allow Mylan to diversify more into overseas markets.

As I said the other day, we have almost two years left with our LEAPS position – seven more quarters, to be exact. Given our relatively low cost in the position and the time remaining, that, along with the guidance provided, is enough for us to continue holding the Mylan position for a couple more quarters at least.

A Sell On Viropharma

Turning to Viropharma (Nasdaq: VPHM), the company reported decent numbers and guidance. However, neither the results, nor future outlook were very stellar – and you need both in a market like this in order to move higher.

We have less than one year left on the January 2009 $12.50 calls (ZCG-AV) and depending on where you bought these options, you’re either very close to breakeven, or slightly profitable (at least if you bought when we initially recommended the play).

Now, sell these Viropharma calls (ZCG AV). Be sure to use LIMIT orders and take your time. There is no need to rush out of this position – especially on a down-day in the market, which today will likely be.

Karim