MS_Money_Moves

Earnings Play-OCUL

Short
NASDAQ:OCUL   Ocular Therapeutix, Inc
OCUL

OCUL has a pattern of descending triangles over the past 4-months (July-November 2019). The company launched its second commercial product Dextenza in the 2nd quarter where it gave away free samples. Its other product 'ReSure Sealent' has posted weak sales numbers ($472K in 1Q19 and ~600K in 2Q19). Dextenza is priced at $850 and is essentially an alternative to prescription eye-drops indicated for the treatment of inflammation and pain post-ocular surgery. Analysts are expecting a decline in EPS compared to the same period in 2018. I think the high price tag (even with J-code) for Dextenza and the strategy of giving away free product will translate to weak sales figures and will send the share price lower. This has been the short-term reaction after 1Q19 and 2Q19 earnings . Although the share price recovered to a high of ~$5.32 this summer it's since decayed and is trading down -17% YTD. Short interest is at 15% which supports a bearish outlook. I think it will reach a ~$3.83 ahead of earnings and then subsequently decline to ~$2.46.

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