From his Action Alerts newsletter ...
Trimming a Chip Position and Adding to a Pharma
After you have received this Alert, I am going to trim 300 shares of Intel (INTC:Nasdaq) at $21.10 and pick up 100 shares of Abbott (ABT:NYSE) at $47.45. I'm up slightly on the Intel trade and will continue to right-size the position, given my preference for EMC (EMC:NYSE) and Oracle (ORCL:Nasdaq), each of which has a strong product cycle story. I do believe the Sandy Bridge processor will be a key driver for Intel in 2011, but I will revisit the position as the chips get closer to launch or if the shares pull back to $18.
I am also going to buy Abbott on the decline today. The stock is down $6 since reporting a strong double-digit earnings/revenue report, but investors have been focused on competition from Pfizer's new anti-inflammatory drug, tasocitnib, for rheumatoid arthritis. Pfizer's drug is still in phase II/III testing and is just for rheumatoid arthritis -- a $7 billion total market. Early studies showed solid efficacy but weak safety data, and it's unknown if it has benefits in bone growth.
Abbott's Humira (25% of revenue) is the No. 1 drug for rheumatoid arthritis, but it also has been used for other dermatology and gastroenterology diseases and is proven to help bone growth. Its total addressable market is $17 billion. Recently, monthly IMS data continued to show its dominance in the marketplace, and I am confident that this is an overreaction in the stock price. Abbott is very diversified, has very little generic exposure and continues to use its balance sheet for acquisitions, which has led to it being the fastest-growth pharmaceutical stock in the industry. The valuation and yield are attractive.
After my trade, I will own 4,700 shares of INTC, or 3.12% of the portfolio, and 2,600 shares of ABT, or 3.88%.
Jim Cramer, Stephanie Link, and the Research Team
Again, what you wrote is factually untrue. You confuse wishful thinking with facts.
Tasocitinib has long ago completed Phase II and now has nearly completed Phase III.
It is one of the THREE FACTORS that keeps ABT stock depressed, the other two are an enormous debt and JNJ lawsuit which ABT is appealing. By repating untrue statements and calling me names you cannot change the facts.
You're the one launching personal attacks because you don't care of another individual's (Cramer's) analysis. Either cover your short or stop acting like such a baby when you read an opinion that differs from your own.
There might be a link on the web to this document, but I accessed it directly from Goldman's client site.
ABT's price is down due to Fear, Uncertainty, and Doubt (FUD) - which you, no doubt, have a stake in perpetuating. Shorts should enjoy it while it lasts.
You won't like Goldman's opinion, but, hey, I'm just the messenger ...
October 20, 2010
Abbott Laboratories (ABT)
ABT’s 3Q continues to show strong operating leverage
ABT’s high quality earnings (better than expected gross margin of 61.6% and higher R&D spend) stood in sharp contrast to JNJ’s yesterday, and demonstrates the potential for continued strong low-double-digit operating performance going forward. However, overall sales were lower by 3% than our estimate primarily due to the Similac recall (which hit 3Q
versus our expectations of 4Q) and the Meridia withdrawal. And while Humira sales were a bit below our expectations ($36 million), the franchise continues to demonstrate stability in the US and strong growth OUS.
We raise our 2010 estimate to $4.18 (prev. $4.16) due to the improved gross margin outlook and modestly raise our forecasts for 2011 EPS to $4.68 (prev. $4.66), 2012 EPS to $5.14 (prev. $5.12) and 2013 EPS to $5.67 (prev. $5.63). Clearly, we are starting to see the impact from Solvay
synergies and expect an even bigger contribution to EPS next year. Moreover, ABT’s Vascular business continues to post strong performance driven by Xience, and appears (thus far) immune from the pressures seen across the orthopedic space from weak procedural volumes and price pressure. Bottom-line: We continue to see ABT as one of the best positioned in the sector to put up strong earnings over the next several
years owing to Solvay and improving margins across its businesses. While we expect some headline risk with the upcoming data presentation at ACR for PFE’s JAK-3 inhibitor, the first study is a small 6-month placebocontrolled
trial. The more important trials will not be presented until 2011.
We maintain our 12-month price target of $58, based on 12.5X our 2011 EPS $4.68.
Management’s ability to address dependence on Humira through M&A.
INVESTMENT LIST MEMBERSHIP
Coverage View: Neutral
<<Pfizer's drug is still in phase II/III testing and is just for rheumatoid arthritis -- a $7 billion total market. Early studies showed solid efficacy but weak safety data, and it's unknown if it has benefits in bone growth.>>
Well, that is just plainly wrong.
Tasocitinib is most certainly NOT in PhaseII/III clinicals. It has almost completed Phase III. Phase II has long been completed. As for safety data, it is as solid as any new drug candidate can be.
I see that misinformation is a specialty of some posters here.
From Cramer's Action Alert Weekly Roundup.
"Abbott Laboratories (ABT:NYSE, $47.40, 2,600 shares, 3.87%) INDUSTRY SECTOR -- HEALTH CARE: I bought shares this week and the stock has now sold off 10% from its highs due to concerns over market share growth for its flagship drug, Humira. This happens every once in a while and typically represents a buying opportunity (especially since this stock yields closer to 4%). Humira represents 25% of the company's revenue and is used for multiple indications: rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis (arthritis in the spine), and Crohn's disease. The drug also slows the progression of bone disease (several other classes of drugs wear away bone while Humira helps to preserve and build it). The company continues to see double-digit growth from this product due to its multiple indications, and recent data was consistent/in line with my expectations. Pfizer's early-stage drug showed promise in efficacy (although side effects were severe), but it's premature to assign a probability of its approval or its level of usage (expectations are for 2013 and third line), not to mention the fact that it is only indicated for rheumatoid arthritis. Abbott's diverse set of drugs and strong pipeline position it better than other pharmaceutical stocks, and the company's acquisition strategy puts it in a good position to continue to outgrow its peers. I'll continue to buy. My next level is $45. My target remains $60."
jd9919 , thx for posting , for those of us that don't have access to Actions Alert , this is free information , and I'm not a Cramer basher , I think we have all learned something from the guy.
ABT is a good add to any portfolio , at current PPS , imo...
If you had any scientific background, you would recognize the importance of listing references. I quote or post links so no one needs to take my word for what I post. You, on the other hand, post your personal opinions (value = zero) and, when challenged, obfuscate and attack.
You keep harping on Cramer’s “Phase II/Phase III” remark even though I posted another Action Alert in which he seemed to expand or at least clarify his view about the drug's stage of development. I also posted an analysis by GS which you failed to comment on. Why? Because that’s what shortsellers like you do: you zero in on whatever you can quibble with to distort an entire investment picture.
I posted scientific literature references regarding the target of the new Phase III tasocitinib drug and its biological target, which has the same name as my user name here for the last 4 years.
Now, go where you were told and do what you were told to do...