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Biogen nearly -20% off after poor guidance/so-so quarter
If I didn't already have so much healthcare already I'd consider buying, although with this taking down a lot of other biotech stocks, it becomes sort of is it a better buying opportunity for Biogen (who did not have a good quarter and guidance was poor) or a better opportunity to add to funds/stocks taken lower by association? Decisions.
I don't like another large cap biotech GILD one bit. But I said that when it was at $100 and that doesn't exactly make me a bright bulb. Scott has been right on there so far. In 2016 revenue growth and earnings growth at GILD is projected by analysts to come to a virtual standstill. They and the other large biotechs better be looking at the faster growing smaller cap biotechs ala AMAG or HZNP as acquisitions. I will say though large cap Celgene still seems to have a lot of future momentum on the revenue and earnings side.
I don't like another large cap biotech GILD one bit. But I said that when it was at $100 and that doesn't exactly make me a bright bulb. Scott has been right on there so far. In 2016 revenue growth and earnings growth at GILD is projected by analysts to come to a virtual standstill. They and the other large biotechs better be looking at the faster growing smaller cap biotechs ala AMAG or HZNP as acquisitions. I will say though large cap Celgene still seems to have a lot of future momentum on the revenue and earnings side.
I like Celgene quite a bit - it's not fundamentally cheap, but if they can achieve their targets for 2017/2020, I think there is a good deal more to go. Celgene is reliant quite a bit on one drug, but they have displayed exceptional skill in partnering with other companies/making purchases - they have a ton of partnerships with other companies. Celgene is doing a very nice job of illustrating what the next five years looks like.
Gilead I've discussed quite a bit. They have had major success with Hep-C medications and the market/analysts are absolutely focused on "well, what's next?" The company is still making a ton of money, has a significant buyback and a solid pipeline. At a 12-13 p/e, I think it's a value. If they make a major purchase a la what they did with Pharmasset a few years ago or even a series of small but significant purchases that begin to illustrate for the market what lies ahead for the company, I think there's a lot of upside. It's undervalued as is. In the meantime, I'll collect the dividend.
I'll be very interested in GILD's forward guidance as I think they'll top earnings estimates on Tuesday. GILD's Hep. C drugs are just getting started in large markets outside of the USA, like Japan for example. In my opinion, GILD can live off of at least the next 3 quarters before worldwide Hep. C cash flow starts to plateau.
Obviously markets are looking at M&A activity for GILD, and GILD certainly has the cash flow to make acquisitions. I consider GILD to be an excellent hold, although today's price makes for a tempting buy.
Looks like the holders in this space are getting a bit twitchy. It's not logical to assume a similar miss on other pharma companies, as the companies are unique based on their compounds and pipe...unlike say chip companies or airlines which move more in unison as an industry. It may be just a bit of valuation concerns on the whole group.
If I were to put additional money in the space, I would look for a basket of mid-level firms with a handful of Phase II, III compounds regardless of current revenue. I've lost count of how many of these companies I worked with that have been swept up for big money.
Biotech have had good run for several years until this week's forward guidance from several big caps. I think I have enough exposure to this sector unless there is further pullback, then it becomes more attractive.
Comments
Gilead I've discussed quite a bit. They have had major success with Hep-C medications and the market/analysts are absolutely focused on "well, what's next?" The company is still making a ton of money, has a significant buyback and a solid pipeline. At a 12-13 p/e, I think it's a value. If they make a major purchase a la what they did with Pharmasset a few years ago or even a series of small but significant purchases that begin to illustrate for the market what lies ahead for the company, I think there's a lot of upside. It's undervalued as is. In the meantime, I'll collect the dividend.
Biogen now actually down 20%. Dang.
Obviously markets are looking at M&A activity for GILD, and GILD certainly has the cash flow to make acquisitions. I consider GILD to be an excellent hold, although today's price makes for a tempting buy.
If I were to put additional money in the space, I would look for a basket of mid-level firms with a handful of Phase II, III compounds regardless of current revenue. I've lost count of how many of these companies I worked with that have been swept up for big money.
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