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Lannett Company, Inc. Message Board

  • ickypicky51 ickypicky51 Jan 29, 2005 1:34 PM Flag

    First Post here:

    Inventories through the roof. Earnings in decline this year. Sells at 5X tangible book value. What am I missing ?????????? I am neither long or short LCI. Am staying away until compelling reason to buy emerges.

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    • <Inventories through the roof.>
      I am not an expert in the drug business but would assume that it is not due to obsolescence. More than likely a slow down due to the increase in competition for Levothyroxine and a build up due to the anticipated approval for Levothyroxine which was received.

      <Earnings in decline this year.>
      All of the money I have made in the stock market has been with finding companies that are ready to turn around. I don't like to jump on any band wagon where the price is heavily dependent on expected future earnings.

      <Sells at 5X tangible book value.>
      The company got this way when it did the deal with Jerome Stevens. I would assume that the deal would not have been done had management thought it was not beneficial (double negative).

      <What am I missing ??????????>
      Expectations. You are looking at the historical performance of the company. Try projecting where the company should be 2 years from now.

      <I am neither long or short LCI. Am staying away until compelling reason to buy emerges.>

      I cannot fault your very conservative position. But when a compelling reason to buy emerges, everyone will know that reason and prices will adjust accordingly. Hopefully, you can beat them to it.

 
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