ABT

Teva Pharmaceuticals Committed to Acquiring Mylan

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Image source: Teva July 5 investor presentation We have been adamant on our stance on Best Ideas Newsletter portfolio holding Teva Pharmaceuticals (TEVA) since the initiation of our thesis on the generics industry in June 2013, shortly before we initiated our position in the firm. Since then shares have advanced nearly 50%, and we’ve continued to let this winner run.   A large portion of Teva’s success has been tied to the incredible performance of Copaxone, the leading multiple sclerosis therapy worldwide. In the first quarter of 2015, the drug alone comprised 18.5% of revenue, while contributing an astounding ~55% of net income. These figures are down from the year-ago period–and the majority of its production life–due in part to … Read more

Here’s A Quick Proof of Why We Think the Way We Do

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Let’s walk through a very basic proof of why we think the way we do. 1) Stocks have an intrinsic value per share that is based on the underlying firm’s future free cash flows and net balance sheet (among other adjustments). Why? Because an investor can buy the whole company outright, pay off the debtholders, and reap the rewards of the future free cash flow stream. 2) Stock prices trade around the firm’s intrinsic value per share, sometimes above it, sometimes below it. Why? Because stock prices are unpredictable in the near term, and purchases and sales can be for a variety of reasons that are unrelated to the fundamentals. 3) Stock prices that are converging to intrinsic value have a greater … Read more

HCV Competition Not New “News” for Gilead

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Let’s set one thing straight. On a fundamental basis, biotech firm Gilead Sciences (GILD) is performing quite well, contrary to what its recent stock price move might suggest. Prescriptions for the firm’s Harvoni and Sovaldi hepatitis-C drugs continue to track slightly ahead of projections, and we would expect a slightly stronger-than-forecast fourth-quarter report as a result. In coming periods, we look forward to positive management commentary that speaks to the strength and sustainability of the firm’s hepatitis-C franchise (about half of Gilead’s sales). Any commentary, in light of the recent uncertainty and growing competition in the hepatitis C market, will be reassuring for investors that have been anxiously pursuing tax-loss selling and profit-taking in Gilead’s shares the past few weeks. … Read more

Dividend Increases for the Week Ending December 12

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Below we provide a list of firms that raised their dividends during the week ending December 12. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Abbott (ABT): now $0.24 per share quarterly dividend, was $0.22. Avago Technologies (AVGO): now $0.35 per share quarterly dividend, was $0.32. Banco Latinoamericano De Comercio (BLX): now $0.385 per share quarterly dividend, was $0.35. BioMed Realty (BMR): now $0.26 per share quarterly dividend, was $0.25. Bristol-Myers Squibb (BMY): now $0.37 per share quarterly dividend, was $0.36. Buckle (BKE): now $0.23 per share quarterly dividend, was $0.22. Capella … Read more

The Dividend Dilemma

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One of the core tenets of the Valuentum process not only rests in the all-important price vs. value consideration (see Valuentum’s Brian Nelson talk about that here), but also in “letting winners run.” At first read, these two items appear to be at odds with each other. For example, we preach about getting stocks at a bargain, but yet, we don’t sell holdings when they start to move beyond our estimate of their fair value. What gives? At the Valuentum core, we prefer an entry point that corresponds to the time when shares have substantial valuation and pricing support (i.e. they have high Valuentum Buying Index ratings), and we prefer an exit point when shares have little valuation and pricing … Read more

Teva: Progressing As Expected; US Generic Revenue Reveals Strength

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On Thursday, Teva (TEVA) reported in-line second-quarter results. For followers of the Best Ideas portfolio, the firm had a rough start shortly after it was added to the portfolio, but recent performance has put holders well into the black. For those interested in the background on the investment thesis on shares of Teva, please have a read of ‘Teva Pharma: Underpriced and Misunderstood.’ Teva’s revenue during the second-quarter nudged 3% higher, while non-GAAP operating income jumped 8%. Non-GAAP diluted earnings per share of $1.23 came in 3% higher than the same period a year ago. The company delivered organic growth in revenue and all profit lines over the comparable quarter last year. Though the results were solid, the thesis on … Read more

Big Pharma Round Up

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Though much has been made about the patent cliff—shorthand for the expiration of the patents of a large number of drugs over a short period of time—we continue to believe that pipelines across much of the pharmaceutical space are flush with new drugs and therapies. Readers may have an individual favorite or two (or three) within the space (and there’s nothing wrong with that), but we think one of the best ways for investors to play the strong pipelines across the healthcare sector—and ongoing consolidation—is through the Health Care Select SPDR ETF (XLV), a holding in the Best Ideas portfolio. The ETF boasts Johnson & Johnson (JNJ), Pfizer (PFE), Merck (MRK), Gilead Sciences (GILD), and AbbVie (ABBV) as its top … Read more

Abbott Ups Guidance; Takes Stake in Mylan

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Abbott (ABT) has a track record that is unrivaled. The firm is more than 125 years old and remains aligned with favorable long-term healthcare trends in both developed and developing markets. We believe Abbott’s nutritionals segment is one of the most attractive businesses in all of the healthcare space, boasting such brand names as EAS, Myoplex, and ZonePerfect. Let’s take a look at the firm’s second-quarter results, which it reported Wednesday. Abbott’s sales in the quarter advanced 3% on an operational basis, while ongoing diluted earnings per share came in at $0.54, representing expansion of more than 17%. The bottom-line figure also came in above its previous guidance range of $0.50-$0.52 per share. The strong results prompted Abbott to raise … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more