This has been my point all along. Now a writer at SA agrees. He basically is saying what I have been saying all along - AEGR is currently more than fully valued even if they perform to perfection!
Here is a piece of his article:
There's a big problem forming in biotechnology -- if you're a retail investor -- and that's a massive disconnect in value and in the perception of a company. The industry has entered a phase where 10-15 times sales seems appropriate, but unfortunately, such valuations are the exception, not the rule, and usually lead to large losses. As a result, the presence of value and overvalued in biotechnology is wider than it has ever been, and in this article, I am giving three different levels of value in biotechnology.
Trading Above Potential
I already touched on the biotech IPO market, which includes preclinical companies with valuations that mimic that of companies with FDA approved or late-phase candidates. However, it's not just IPOs and preclinical companies that trade with exceedingly high market capitalizations. These exceedingly overvalued company's worth are also seen in companies with late-phase products, and even some that already have FDA approved and marketed products. One in particular that comes to mind -- a company whose value leaves virtually no room for error -- is Aegerion Pharmaceuticals (AEGR).
To prove my point, I am going to use the notes of a bullish analyst of Needham's Chad Messer. Messer likes the company's drug Juxtapid, which treats a rare cholesterol disease called Homozygous familial hypercholesterolemia (HoFH), and has led to Aegerion's 275% gains in 2013. Messer upgraded the stock, currently trading at $88, to $100 from $50. His logic is assuming that Juxtapid captures 17% of a targeted 14,000 patient population by 2018. If so, worldwide sales could reach $590 million, giving the stock an EPS of $7.28. Messer then puts a multiple of 30 on the EPS and applies a 25% discount to arrive at a $100 price target. (see SA