Company announcements powered by promotions is often a good short term combination, which National Pharmaceuticals Corp.(PINK:NFRM) put to the test this week. At least it got the much needed attention – people are finally spending more than a hundred dollars on their shares. As for stability and growth – there are some obstacles to consider.
As mentioned, NP is finally on the radar. There has been a dramatic increase in the volume of traded shares over the last few days, a slight increase in the stock price as well, and all this sparkled by the recent announcement about LOI for licensing a drug. Well, it was actually promotions that brought the hype, but after all it is results that count. More than 800k shares were traded traded just yesterday, which a phenomenal number, since last December the daily volume was usually between 1 and 5k.
Instead of gaining momentum, however, it was just a one-day positive shock, followed by a sharp crash in the stock price, hence the great number of traded shares yesterday. Maybe someone was just waiting for the right moment to dump his shares. Yet, it is also possible that traders sobered after the initial excitement. After all, what is actually a Letter of Intent and what guarantees does it offer that a contract is to follow and increase of revenues is to come? [BANNER]
On a related subject, speaking about revenues, this is perhaps one of the few pink sheet companies with good financials. Current assets estimated at twice more than the current liabilities is just one fact to keep in mind. If, indeed, the company announcements turn into contracts, licenses; thus revenues, National Pharmaceuticals might be going up for a sustainable growth in the coming years.
Unfortunately, there is flip side to that coin and it is the facts of the present. Despite the relatively good financial figures for this year, they are yet not as appealing as the ones for 2009. Simply put, there is a decline in sales, and that, unlike the stock price, is not something that promotions can fix over a day. It is a tough challenge that it is yet to see whether the new CEO Elaine Affleck can cope with.
