So by just how much is Shire undervalued. Firstly they are selling two existing high growth drugs for ADHD with annualised sales of 21% x $596M = $125M. In a takeover situation these drugs must be worth 10 x $125M = $1250M but say we discount this by 60% to arrive at a figure of $750M. Then they are selling Carbatrol for epilepsy, which has started to successfully compete in a market worth over $220M p.a. - this has to be worth $250M. These existing drugs are therefore worth about $1B, which is just about the current market value of the Company. But then they will shortly be selling the Alzheimers drug Galantamine, which by all accounts will in no time become the world's no 1 drug for the world's fastest growing disease. How many billions is this worth - has anyone got any ideas? Then Galantamine could also be used for Chronic Fatigue Syndrome. And then finally they have had early trials success with Lambda. Tomorrow we shall hopefully know far more from the conservative Board but this stock should be worth three or four times its current valuation. My guess would be that J & J will buy Shire well before Galantamine's true worth ever surfaces.
I don't want to bust anyone's balloon, but, according to Joe Riccardo at Bear Stearns, the company is worth $30. on a sum-of-the-parts basis. He and his associate own .6% of the shares. Book value and current earnings don't justify current price. They estimate $30. price in 12-18 months.
Thanks for the interesting valuation analysis. Re: your comment on buyout by Johnson & Johnson, is Shire up for sale? I haven't heard anything along those lines, but I quess anything is for sale at the right price.
Probably the best advice for today would be to go to the beach, but believe it or not I could actually see some movements to the upside on the Techs. The fact that the NASDAQ only fell 8 pts. Lends believability that some of them will move a bit as the traders who did not leave for the weekend grab a position. Don�t get us wrong, I�m not expecting this, it simply wouldn�t surprise me. Keep and eye on all the upgrades that were issued yesterday, because the Market was so �funky� they might go better if today isn�t so negative
Not a sector to be holding right now. Again one-day pops can be daytraded, but be careful here the selling probably isn�t done.
Biotechs: A you know my favorite sectors are biotech and telecom right now. Yesterday on a horrible day BGEN and AMGN gained well, IMNX held its ground, and IMCL tried really hard. Watch them and our smaller issues ONXX and VGIN.
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