Double the average volume and a 1% gain? Why are people jumping in? And why are those jumping out not demanding a MUCH higher price?
Current Market Cap = 30.24 billion
Projected Added Gross Revenue On Approval = 30,000 x 40% x $300,000 = 3.6 billion
Projected Added Cost of Sales = 3.6 billion x 10% = 360 million
Projected Total S&OP Costs = 1.9 billion
Projected Total Revenue = 4.2 billion
Projected Net Income = 2.3 billion
30.24 / 2.3 = 13.14 times future earnings. So a 20% to 25% run is realistic - I think you may be right.
That was my initial caution. Another way to look at this, is that it implies they expect cash flow development 2 to 3 quarters ahead of current pace, or they just get more debt. But no dilution is a positive.
I don't know how many times I posted they needed money. 300 M seems either too small as I thought a billion based on development forecasts and cash flow projections - OR - this is an incredibly bullish sign that Vertex management reasonably projects that (A) they will increase revenue by additional indications, partnerships, or sale of non strategic assets, or (B) accelerate development, or (C) any combination thereof.
So how do you read it? Bull case or Bear case. I am leaning towards Bull.
Sentiment: Strong Buy
Great discussion Third, papa, Glad.
Third - I think you are misunderstanding the pretense of the statement. Companies can think big and act small. They can think small and act big. Thank can think big and act big. Or, they can think small and act small.
The emphasis is on how they operate.
When you are comfortable, someone else will be uncomfortable... and that discomfort will drive them to beat you.
Great example... I am really comfortable selling Incivek... it is the best thing on the market for Hep C. Don't bother pushing... and lets sub license the Alios compounds as an after thought... COMFORTABLE. And what happened? Gilead took Vertex's lunch. Stomach that.
So contrary to your assertion - they can still run this into the ground if they continue to function like a bloated R&D firm in lieu of a LEAN commercial business unit.
I love what one of the GE (or 3M, don't remember) executives quoted - stay small and you will be big... be big, and you will become small.
Is Vertex acting BIG or SMALL...
The June 110's are reasonably priced versus the risk / reward.
Cheaper options including buying verticals as well, buy the 100's and sell the 105's to 110's... June or July.
I currently have options positions in Vertex. The low risk in lieu of stock versus the potential reward is worth it.
This assumes they deliver on time.
For sure Papa. Which is why I always diversify and always move in increments, not all at once. Presently 20% cash. If it goes up from here, still make money. If not, I will increase the percentage holdings until either we signal a bottom and / or interest rates rise.
No one is 100% correct all the time. I have done well, sometimes based on intelligence, sometimes based on luck. The times I have been at my worst are when I thought I knew everything. I became a much better investor when I learned to always have a healthy level of skepticism.
~ Good luck.
I won't labor you with the 300 + metrics I set my excel sheets to web-query and further inundate you with the econometric models I have spent years working on. You just have to believe me when I state I have a valid, not 100% accurate model of the market I utilize to trade by. For this discussion, lets say I have a coincident and lagging metric. The spread of those two metrics is a leading indicator of the direction those two aforementioned metrics will move. For the last 30 to 60 days, I have watched the coincident and lagging metrics come dangerously close to each other indicating a 93% chance of a market top. Internally, the leading indicator nearly went from positive to negative today. That is a signal of a market top. Only one time in the last 70 years has the market recovered and climbed higher from these signals. That is the macro stock market signal I am looking at.
On positive CF data, Vertex could pop, yes. But in the interim, I think the market is on the precipice of a major correction. There is also the dynamic of a rotation out of biotech.
So I think this could go significantly lower, and the reason has nothing to do with Vertex and everything to do with the capital markets in general.
Thank you Third. I did straight percentage to population multiples by mutation before. I also included Japan if I remember correctly as the demographics included Japan, but I might be crossing over into the Hep C figures... don't remember, that is why I wrote it down. Kick myself because I have an external hard drive to back up too... [facepalm].
Before my hard drive crashed and I lost my extensive CF model - I had the estimated CF populations by mutation for every country in the world. So frustratingly, and not just being lazy, would you know off hand what the population size is for the mutation types for the above 3 countries? Secondly, do you know if this is a new position or a fill position on market disaggregation, or did someone quit.
Thank you for your input.
In the short term this stock fell over 70% in one day... that is a little over 6 years of historical stock market returns.
Still made 400%. Glad I sold my shares before the binary event.
Thanks Mr. Market.