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Cabot Oil & Gas Corporation Message Board

finance.phil 3 posts  |  Last Activity: Mar 11, 2015 1:35 PM Member since: Feb 28, 2013
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  • Reply to

    I will add in the $50-60 range

    by usingaliase Jan 15, 2015 11:14 AM
    finance.phil finance.phil Jan 15, 2015 2:45 PM Flag

    *IF* they cure SCD then BLUE will be worth well over $500 a share. Realistically, they will acquired before that happens though.

    It is a more speculative biotech than say a Celgene, but the odds are looking good and I'm happy assuming this level of risk.

    Sentiment: Buy

  • I think good news is likely around the corner.

    Sentiment: Strong Buy

  • finance.phil finance.phil Mar 11, 2015 1:35 PM Flag

    Your arguments are extremely weak. You make yourself look like an idiot by even mentioning the fact that they are cash-flow negative, a situation that is extremely common among clinical stage biotechs.
    As for your valuation argument. Let me show you a very simple and admittedly rather crude calculation:

    Conservative estimates for Lenti-Globin sales put the market opportunity at approximately $750m globally. With most of the discovery and developmental costs already bore out, let’s conservatively assume 75% margin on those revenues to produce $563m in earnings. With 32.5m in outstanding shares let’s factor in those Lenti-Globin earnings to calculate a new EPS:

    563,000,000 (earnings) / 32,500,000 (shares) = 17.32 (new EPS)

    Now let’s calculate the new PE ratio using today’s current price of $118 dollars per share:

    118 (price) / 17.32 (EPS) = 6.81 (PE)

    Now it doesn’t take a genius to figure out that if Bluebird Bio does indeed cure B-Thal/SCD that that PE of 6.8 is going to be at least 3-4 times higher than that given today’s valuation. Additionally, please note that this is JUST the Lenti-Globin franchise! I’ve not even included their Lenti-D or the Car-T Cell franchises! The former already being at a very advanced stage in the clinical testing process.

    Now this is admittedly a very crewed calculation that doesn’t take into effect likely dilutive secondary offerings for example, but the point still holds. IF they cure these orphan diseases, and the clinical data thus far suggests that they are on a solid path to achieving that, today’s valuation is going to look extremely cheap.

    As a short, your ONLY chance is that they get poor clinical outcomes in phase 2 or phase 3 testing, but as someone on the long side of this trade, I would have to ask what you’ve read or heard and from whom so far that would give you the impression that that’s likely to happen?

    Sentiment: Strong Buy

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