ESRX

Recent Material Fair Value Estimate Changes

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By Kris Rosemann Let’s begin this edition of ‘Recent Material Fair Value Estimate Changes’ with a discussion of some of the highest-profile names that made the list. If you require background reading on why we make changes to our valuation models, please see: What Causes Fair Value Estimates to Change? We’ve raised our fair value estimates for two of the holdings in the newsletter portfolios, General Electric (GE) and Union Pacific (UNP). The sprawling and evolving industrial portfolio of General Electric is one of the more exciting portions of our portfolios, as the industrial giant boasts assets with authoritative positions in areas from the rapidly expanding Industrial Internet of Things to the rebounding energy services space. An increase in near-term … Read more

PBMs: Express Scripts and CVS’ Looming Victory?

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Image Source: Victor We’re expecting a big win at CVS in coming years, and it may come at the expense of Express Scripts. By Alexander J. Poulos With the recent addition of CVS Health (CVS) to the newsletter portfolios, we believe the sell off in the Pharmaceutical Benefit Managers (PBM) industry is overdone. We are intrigued by the free cash flow generated from a highly-predictable business model, and that the PBM’s negotiate contracts in advance, locking in a customer for an extended period, only adds to the attractiveness of their operations. Another PBM, but a pure play, is Express Scripts (ESRX). Let’s discuss the unique characteristics of Express Scripts along with notable risks, which prevented us from adding the name … Read more

Is AbbVie a Value Trap?

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With uncertainty surrounding the patent of blockbuster drug Humira, AbbVie is looking to deliver another success story from its pipeline. Is it headed for a patent cliff? Let’s take a look. By Alexander J. Poulos and Kris Rosemann A successful operator in the pharmaceutical industry (XLV) is often characterized by having high margins, allowing for copious amounts of free cash flow generation, which can be returned to shareholders via dividends. In today’s yield-starved market environment, major pharma, and the above-average yields of some players within, remains in demand, but investors must be cognizant of the unique risks that face the industry. One key risk remains the loss of patent protection on drugs and treatments that leads to the aforementioned attractive … Read more

CVS Health In The Bargain Bin? We Think So

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Image Source: Mike Mozart By Alex Poulos The stock market can be a fickle creature, bestowing its affections seemingly upon random industries. As 2016 comes to a close, the financial and energy-related names are all the rage with many pundits gushing about their prospects in 2017. I have often found when the Street is waxing eloquently about a certain sector, most of the easy gains have been made. Often, a contrarian view is necessary to generate acceptable returns. An unusual opportunity is before us in a company that operates in one of the most unloved fields of all, healthcare. CVS Health CVS Health (CVS) is generally categorized in the consumer staples (XLP) sector of the S&P 500, yet over 85% … Read more

Pharma, Biotech and How to Consider Investing In It

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The Valuentum analyst team digs deep into recent trends in big pharma and biotech from the lofty pricing of drugs to political and competitive pressures to ETF considerations and beyond. ~10 mins. If you cannot view the podcast below, please view the transcript below or select the link here. Tickerized for holdings in the XLV and IBB. Brian Nelson, CFA Gilead’s (GILD) hepatitis C regimen, almost a hundred thousand dollars. Vertex’s (VRTX) cystic fibrosis drug — hundreds of thousands of dollars per year. Have the drug companies lost their mind? This is Brian Nelson from Valuentum Securities, and today joining me is Mr. Kris Rosemann and Mr. Chris Araos — and we are going to talk everything healthcare, biotech… Mr. … Read more

If It Happened to AbbVie, Could It Also Happen to Gilead?

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The Valeant (VRX) and Citron saga is not all the drama happening in biotech these days. On October 22, federal health officials warned doctors and patients that two of AbbVie’s (ABBV) hepatitis C treatments can cause life-threatening liver injury in advanced stage patients. The Food and Drug Administration announced October 22 that it will require AbbVie to add new warnings to its Viekira Pak (1) and Technivie (2) drugs after deaths and liver transplants have been reported in patients who already had liver damage caused by the disease. During the second quarter, global sales of Viekira were $385 million, on pace for blockbuster status. Viekira is one of AbbVie’s top drugs, trailing only Humira in sales during the six months … Read more

Big Pharma Earnings Continued…

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Amgen (AMGN) Amgen’s second-quarter results, released July 30, were a sight to see. Total revenue advanced 4% versus the second quarter of last year thanks to strength in Enbrel (etanercept), Prolia (denosumab), Sensipar (cinacalcet), Kyprolis (carfilzomib) and XGEVA (denosumab). Adjusted operating income and adjusted earnings per share leapt 10% and 8% in the quarter thanks in part to the strong top-line performance but also solid adjusted operating margin improvement (~+2 percentage points). Free cash flow generation was also fantastic, with the firm hauling in $2.7 billion in the measure compared to $2.1 billion in the second quarter of 2014. Keys to the Quarter: Investors should keep an eye on its blockbuster Neulasta/NEUPOGEN performance, which faced sales pressure in the quarter, … Read more

Quick Take: Gilead Blows By 2Q Estimates; Investors Getting Drug Pipeline for Free

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Gilead (GILD) has delivered. The company’s second-quarter 2015 results showed product sales of $8.1 billion and non-GAAP earnings per share of $3.15, up 27% and 33%, respectively, from the same period a year ago. For those that don’t know Gilead, the company’s hepatitis C powerhouse drug, Harvoni (ledipasvir 90 mg/sofosbuvir 400 mg), led to the quarterly outperformance. We continue to believe the market is 1) underestimating the sustainability of Harvoni (both the number of potential patients to be treated globally and pricing resiliency) as well as its drug development pipeline, which we believe investors are getting for free. Gilead is a holding in the portfolio of the Best Ideas Newsletter, and we don’t expect to make any changes following the … Read more

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

Target-CVS Agreement: What It Really Means

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Image Source: Mike Mozart Target (TGT) and CVS Health (CVS) announced an agreement June 15 in which CVS would acquire, rebrand, and operate Target’s pharmacies and clinics for the price of approximately $1.9 billion. After the deal closes, CVS will operate 1,660 of Target’s pharmacies in its stores under the CVS/pharmacy brand name. The nearly 80 Target clinics involved in the deal will be rebranded as MinuteClinic, and CVS plans to open up to 20 new clinics in Target stores, part of the CVS/minuteclinic goal to operate 1,500 clinics by 2017. Target and CVS also plan to open five to ten small, flexible store formats that will be branded TargetExpress and include a CVS/pharmacy. After Target’s recent Canada debacle, we … Read more