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Elan Corporation, plc Message Board

  • Rufus_II Rufus_II Jul 9, 2002 10:03 AM Flag

    Good news/Bad news for ELN

    The conference call appears to be good news for investors worried about company survival. The CC gives hope that ELN management will respond in a rational way the the company's challenges, rather than hiding and delaying, hoping for a miracle. That alone should cause the stock price to at least double from this very low level, once we start getting some clarity. With Geaney gone, they should be more open to a buyout (once the SEC issue is resolved). The biggest obstacle to a buyout is often the ego of an entrenched CEO.

    But the conference call appears to be bad news for those who were hoping for a return to double digits. ELN has cash of $1.37B, but most of that is spoken for. They have pumped up that number by drawing on their short term credit line. They have sold assests, with an option to rebuy, creating essentially a loan, to bump up their cash position. They have payments for product aquisitions due, and they seem to be burning cash. After adjustments for the above, it is hard to see how much cash they have left (help on that issue from other posters would be appreciated). Probably not much cash is not spoken for, because they are embarking on a program of selling assets at the very bottom of the market (at least we hope it is the bottom, and things don't get worse.) If they really thought they had no liquidity problem they wouldn't be selling $1B in assets.

    I am heavily invested in ELN and hope to get out of here at $5.

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    • $5 is a pretty good target right now, IMO.

      Not a good market. But, if the overall market improves, say early Fall this year, then this can reach $10 this year, IMO. But, as you note, old longs waiting for much more may wait pretty long. That said, $10 is not, I think, the upside potential.

      $5 by August 1 I think is a reasonable target. The CC today, although good for those in the know, will be perceived by outsiders based on the news releases by others -- and these thus far do not read all that optimistically. This stock may be worked hard to accummulate shares for the upward move, and that may take a bit of time.

      good luck

      jack

    • rufus, just wondering... if you had never had a position in ELAN, would you be buying to open a new position now or would you move on to something else?

    • Rufus:

      Good Luck. I listened to the the part about cash and came up with the same conclusions.......alot of it is spoken for.

      Capital Markets suck big time right now. These waters are filled with sharks, ELN will have to navigate carefully or maybe eaten alive.

 

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