| Stock (Symbol) | Stock Price | |
Alexion Pharmaceuticals (ALXN) |
$187 |
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| Data is as of | Expected to Report | Sector |
August 17, 2015 |
Oct 21 – Oct 26 |
Healthcare |
| Sharek’s Take | ||
 Alexion Pharmaceuticals acquired Synageva Biopharma in May to take its rare disease drugs from one to two. But ALXN paid 135% more than Synageva’s stock was worth, and it will take a while to see if ALXN can get $1 billion in sales out of Synageva’s drug Kanuma like it thinks it can. Alexion considers itself a rare disease (orphan drug) specialist but only has one drug on the market now, Soliris, and another in the pipeline in Asfotase Alfa. I can relate to management’s stance on spending to grow, but in the meantime the company lowered next qtr’s estimates as the buyout will hurt profits, and negative profit growth is expected the next 4 qtrs. So for now we will just have to consider this a longer term investment, and give the company time to develop and get approval for these two potential blockbusters. Synageva also has another drug in midstage clinical testing and is working on four others. At 39x earnings, it seems the stock is a tad overvalued, so I have taken profits and sold partial positions in client accounts. Longer term, ALXN is expected to see profits jump from $4.84 this year to $7.76 in 2017, which implies 60% growth in two years. |
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| One-Year Chart | ||
 Wild one-year chart. Stock’s all over the place. And now 2015 profits are expected to fall. The P/E of 39 is way higher than the expected long-term growth rate of 17%. |
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| Earnings Table | ||
 Profits increased 29% last qtr on 24% sales growth.ALXN beat the street by 5 cents last qtr, but missed by 4 cents the prior qtr.Annual Profit Estimates dove 2 qtrs ago, and were mixed this time around. I like the $7.76 estimate for 2017, which implies 60% growth from 2015. Quarterly profit growth could be nagative the next four qtrs. |
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| Fair Value | ||
 ALXN was a bargain back in 2010 and 2011. Now its selling for a much higher multiple. I think the stock could be a bit overvalued now, but I have never been good at forecasting the growth a new drug can provide to profits or a stock price. |
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| Ten-Year Chart | ||
 The ten-year chart looks excellent, except that 2015 looks to be a down year for profitability. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
20 of 26 |
Alexion Pharmaceuticals’ now has two more potential blockbusters its working on which could bring strong profits to the bottom line. But in the meantime profit growth is set to be negative the next 4 qtrs unless something gets approved. ALXN ranks 20th of 26 stocks in the Growth Portfolio Power Rankings. It’s not timely enough for the Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
N/A |
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