this company is a cash machine and does not need to waste money on an acquisition. As painful as the slide has been, I stress patience. Earning $4 and managing the bottomline is the best way to create shareholder value. Most acquisitions fail or are overpaid for. If these guys do a major dilutive acquisition, you will see more pain.
I agree most acquisitions do not create long term shareholder value but I bet it could make the share price increase in the short term (by paying off the opinion makers.)
Listening to todays conference, I think Ian Smith actually did a good job presenting Vertex's position and strategy. When he spoke of possible share buybacks in the future, he seemed to be indicating that it made sense if the company's shares continue to be undervalued. He also stated that Vertex management thinks the analysts covering the hep C drugs have been jumping to conclusions too quickly.
I agree. It is too early to pay dividends or buyback shares. Vertex needs to maintain financial and strategic flexibility by accumulating cash and plowing back earnings into the clinical development of products with returns that could far surpass any return on a share buyback.
It makes sense. At these prices VRTX's best investment is in its own stock. With a $2B+ anticipated revenue, they should buy back shares rather than spend any more money on interferon based regimens since the market is discounting the value of non oral therapies.
Buyback or cash dividend are good ideas. Don't buy another company. Think about it, would you buy VRUS that has a 5B cap so they won't sell unless an offer is close to 10B? Who knows what garbage these other companies have.
Yes, an acquisition would be a the right thing when they have the cash. They could involve several large investment banks in the acquisition and, in the process, pay them the millions of dollars they require to have their analysts recommend buying Vertex. This would be the most effective way to raise Vertex's pps. The whole relationship between investment banks, analysts and the companies they cover is completely corrupt.