I did some calculation about 3 stocks and this is my finding based on market cap, cash, debt and income.
The following are my target
based on above, the most undervalued stock is ACOR.
Although I like DEPO but it still connected to other stocks that do minimum R&D. At least, DEPO is not marked with price gouging.
That said about DEPO, I start to move more money to ACOR that is putting 40% of its revenue in R&D but still positive income. ACOR revenue and growth is the same as DEPO at this point but ACOR debt is very low and it has more cash than debt. After all, it has 3 products in phase 3 which it will file for approval in Q1 2017.
In past 3 years, ACOR has put $277m or $6.4 per share in its R&D. It has 3 products in phase III. These are investments that are not visible to many.
After all, ACOR has very small market cap compare to many in the sector. Its cash flow is high enough to provide money for its R&D.
New acquisition will add an approved money making product (double digit loyalty) plus another product in phase III with a high potential.
It is cash flow positive, more cash than debt. Right combination for acquisition or growth to be a mid cap.
Sentiment: Strong Buy
Estimates are down a little bit but that may be because some analysts lowered it or considered legal expenses plus drug development expenses.
As long as revenue is growing, that is a good news and the money that goes into development is an investment for future.
Revenue is growing. Income is positive and large enough to provide money for its huge R&D.
It is cash positive without any debt with very low shares outstanding and low market cap.
It has 3 drugs in phase 3 and results will be known by end of this year.
It is one of the best I ever seen in the sector. It will be target of acquisition one way or another.
I'm disappointed with this bonus action. This is an obvious misuse of the company resources. TW wasted a lot of money on DEPO and now he is awarded with a package that rarely any large cap company can give to its CEO.
Geri, there are people who may say that FA and other activities are speculation but what I am trying to say is the worst predicted scenario and minimum that HZNP can accomplish. but if FA and other activities are successful and if HZNP can land any of them then double my predicted prices.
$100m is a lot of power. Any new startup company dreams of having this kind of money.
Anyway, HZNP can have over $400m a year with current income while adding other drugs to increase the income to $150 and so on. Just give HZNP 2 years and HZNP income will be over $200m per quarter. By early 2018, HZNP should be trading between $40 to $60.
Now MRK will compete with GILD and ABBV for hep-c, a cure that once was dominated by GILD. JNJ also may join them later.
Too much noise around hep-c drug pricing but system is working out by creating competition and driving prices down. If it was not for interesting pricing, the system was still struggling with first the drug and its plenty of side affects. Basically, opportunist like HC is working against the system since she does not understand the system.
Anyway, GILD and ABBV are down and they are putting pressure on the sector. However, speculation of having a competition have pushed GILD and GILD problem is it does not active in R&D as before. Sooner or later, HZNP should be rewarded for its increased activity both in M&A and R&D.
Good point. I am seeing a lot of similarity with other stocks in other sectors. CRUS is a company that provide audio of apple phones. It stared around $2 until investors noticed the company and they pushed the price over $40. Then some people started to doubt CRUS, being a one trick pony and apple to cut it off. They pushed the price to levels between $15 to $20 for a while but CRUS was showing income of over $2 over a year. One day, all the sudden, CRUS took off and went above $30 and stayed around this level in a good or bad market.
I see the same scenario for HZNP. Stayed invested and do not listen to doom and gloom since price will go up with no notice.
sami you are wasting your time when you try to make lemon juice out of some bad lemons.
On July 20, 2015, HZNP hit $39.49 and 3 months later on Oct 22, 2015, it hit $12.86.
That means, most investors were at loss when the stock lost 67% from its high. Although the market inflicted most of this torture period but HZNP management were guilty as well with some of their unpopular decisions too. We have not covered that much and we are still down 52% from the high. Please don't remind us with unrealistic gains from the lows since only a few new investors could have that low prices and of course, people who get that low prices were either shorts or traders who did not hold the stock. So, your advertisement of such gain is unrealistic. Basically, most investors who averaged from low to high or high to low are at loss.
No one can time the low or high but the obvious thing is that some investors exited with losses when the stock went from mid $39 to high $12 in a short period. After all, the stock only stayed at its lows for a few minutes and also it ramped to current prices in just few days and it did not give any chance for new investors to get that much shares. So, most investors who bought in past 52 weeks are down.
I agree that oil will go lower.
Investing in HZNP or any other stocks should not blind us.
There are many reasons for oil to go lower. Saudi Arabia started the trend by increasing it production to damage Russia and Iran in favor of US, Europe and Arab countries. Now situation got worse since Saudis got involved in expensive Yaman war and it needs more money. To compensate, Saudis forced to produce more oil and sell it cheap to compete against Russia, Iran and even US. Now, another factor will make the situation worse than it is. Iran sanction will be lifted next week and Iran has plan to increase its production from 1 mil to 4 mil barrel per day. All Opec countries are in need of money and they are competing against each other and against Russia and US for piece of pie. At the same time, there are more other energy sources like solar that put more pressure on oil prices while demand from China and India is not as good as years ago.
Yes, analysts are correct when they talk $25 and even $20 oil. Russia and middle east countries income mostly come from oil and when it is cheap they have to sell more to compensate for the shortfall.
ABT ex-date is Jan 13. That means an investors should buy the stock by Jan12 (ok if you buy on Jan 11 and hold it). When the market closes on Jan 12, all holders of ABT will get dividend since the record date is 2 days after ex-date. So, if you buy ABT on Jan 11 or 12 and sell on Jan 13 or after you get the dividend.
recombinantman, you are wrong.
As an example, ABC Inc declares a $1 dividend with an ex-dividend date of January 10th. Anybody who buys the shares on the 7th, 8th, or 9th—or any date prior to the 10th—will get that dividend. When the stock opens on the 10th, it will be adjusted down by $1 from the 9th’s closing price. Anybody who buys on the 10th or thereafter will not get the dividend.
Another important note to consider: as long as you purchase a stock prior to the ex-dividend date, you can then sell the stock any time on or after the ex-dividend date and still receive the dividend.
Ex-dividend dates are the single most important date to consider whenever buying a dividend-paying stock.
The record date is simply the date where the company looks at its ledger and determines to whom they send the dividend checks (“the holders of record”). The record date is always two business days after the ex-dividend date (business days being non-holidays and non-weekends). This date is completely inconsequential for dividend investors, since eligibility is determined solely by the ex-dividend date.
We hear a lot about diversification of portfolio. However, when the market goes down and almost all stocks follow the market, your portfolio shrinks even if it is diversified.
However, there are a few ways that reduce the losses and when the market switches to a positive direction, your portfolio may gain more.
First, this volatility was expected and many analysts mentioned that when FED increases the interest rates then volatility will return and here we go.
Second, the market is volatile but it is not repeat of 2008. The economy may have some weaknesses but it is not like 2008 that financial and many other sectors go bust.
Third, health care is a defensive sector and investors tend to put money in this sector instead of other sectors.
Lets do an example with two stocks like HZNP and PFE.
If an investor held HZNP since start of 2016, then he is down 12.4% since Jan 4 of this year and down 14.7% since Dec 28 of last year. For the same period, PFE is down only 4% and 5.5%. Well, having only HZNP means more losses than having only PFE. With the same token, when market goes positive, PFE will gain much less than HZNP. So, having a combination of both results in about 7% loss.
However, if an investor holds both, he can play a game to minimize his losses and maximizes his gain. On the other hand, the losses can be reduced and gains can be increased If an investor switches money from HZNP to PFE during the downturn and reverse his action during the upturn. You may say who can time the market, but it is possible to see the trend and direction.
Bottom line, it is time to switch money to HZNP from other stocks or from cash position since HZNP and other stocks are about to gain some or most of their losses that happened in past 7 trading days. The difference is that if market recovers some in second week of 2016, PFE may gain only 2% to 3% while HZNP can gain 7% to 10%. It is better to have more HZNP than PFE to take advantage of recovery at this point.
Sentiment: Strong Buy
Indeed DEPO and its management contributed the most damages to HZNP. It was a lose lose situation for HZNP. Not only HZNP was about to pay about 84m shares but assuming $575m of debt and other expenses while it was bombarded with negativity, misinformation and intentional propaganda of DEPO management. They tried every trick in the book to damage HZNP. It was speculated that DEPO was involved in leaking news to Hillary, media and ES beside officially releasing PRs that pointing to HZNP business model and price gouging and linking VRX to HZNP.
Fortunately, the best thing that could happen to HZNP was to cancel the dea. Now, we are on our way to high growth without diluting the shares or taking huge debt for something that was not worth it.
Health care and financial are 2 sectors that will do well in 2016 based on analysts predictions. However, medical company with stable income will be in demand. Add to that factor, the growth story, low valuation then HZNP is one of the stocks in demand. We may see some movements today and also early next year.
I do not think any news during holidays but rebalancing is going on. Tax sales are done and there are plenty of money to be invested in good stocks. HZNP is a stock in a defensive sector with low valuation and low price. The income is stable and PE is very low. Investors love to have it part of their portfolio for 2016.
On another note, HZNP technical is so strong that it cannot keep it at current prices regardless of the market direction. $23 is screaming and begging to be hugged and kissed. May be New Year gives it that chance.
So, $510m was sitting in the bank and at max collecting 1% of interest or $5.1m per year. Counting inflation, the money was losing its value.
However, with new Crealta deal, the same money is paying $45m to $50m EBITDA which translates to $40m to $45m net adjusted income (Net adjusted income is 90% of EBITDA. HZNP Q3 EBITDA was $131m and non-GAAP net was $117m). Above income also translates to $.24 to $.27 per share of income for the first year. But $.30 and $.40+ per share will be here after 2016.
What is forgotten is EU that HZNP will have approval for this drug and also Ravicti and Lodotra (Rayos).
3 drugs in EU so far and all it needs to get Pennsaid 2% which is looking for a company to market it in Europe.
HZNP may form a marketing team in Europe and go international eventually. Income from Europe is a bonus that is not counted yet but it will play a role in future.
Oh well, getting $40m to $45m for first year is a good use of cash (8% return in first year). But this is just a start and the return percentage will increase every year while the drug value goes up at the same time.
If we could see 2 years from now, we probably laugh at current HZNP prices. Was really HZNP trading around $19? Some new HZNP buyers may say in late 2017.
Sentiment: Strong Buy
It does not matter how and what Crealta paid(deep discount from a BK company). This is what it worth now and of course TW and his team done all the calculations before jumping in this deal.
Both TW and Crealta CEO and a few other top manager come from ABT. They know this field better than anybody else. It will be an stable income and an stable growth out of this drug. This is sweet that no share dilution or interest payment are attached to this deal. After paying for this deal, HZNP will have over $300m cash in hands for other smaller deals. ($684m + $42m depo shares + $90m from Q4 - $510m = $306m + what is made in Q1 2016 or about $400m at the end of Q1 2016.
Sentiment: Strong Buy