GILD

GlaxoSmithKline: Not All Dividends Are Created Equal

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Many seeking ideas to generate dividend income may be drawn to slow-growing entities with large dividend yields. However, without proper examination of the balance sheet and competitive position, an investor may enter a position banking on a steady dividend stream only to be caught by a sudden cut in the dividend. It is growing increasingly likely that GlaxoSmithKline may be ready to sacrifice the dividend on the altar in the name of additional M&A, in our view. By Alexander J. Poulos GSK Overview GlaxoSmithKline (GSK) remains a venerable European entity with a number of business lines similar to its US rivals such as Pfizer (PFE). At GSK’s core is its heavy reliance on research to bring forth additional novel branded … Read more

Gilead Sciences’ HCV Guidance Is the Star of the Show

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Shares of Gilead Science have been held hostage due to the vagaries of the HCV business. The shares blasted through $100 as the initial sales ramp for its suite of HCV meds took the market by storm. The record revenues posted in 2015 proved to be unsustainable, however, as the curative nature of the treatment meaningfully decreased the eligible pool of patients much to the benefit of society. The Street subsequently punished shares of Gilead as the equity made a near roundtrip back down the high $60’s. The investment community has maintained a near-maniacal obsession with the HCV pipeline with the latest fear of a new competitor stealing share. Let’s examine these key points a bit further. By Alexander J. … Read more

2018 Healthcare and Biotech Outlook

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Image Source: Global Panorama. 

2017 will undoubtedly go down as one of the most fabulous years for the stock market, and while we continue to warn of the dangers associated with the market continuing to trade at lofty valuations, we are intrigued by the outlook for big cap pharma and biotech in the near term. Changes in the US tax laws will likely have a profound impact on the industry.

Video: Quants! You’re NOT Measuring VALUE and Nelson’s Theory of Universal Value

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President of Investment Research Brian Nelson defines the concept of universal value and shows how quantitative statistical methods are inextricably linked to those of fundamental, financial, business-model related analysis. Value does not exist in respective process vacuums! Value is universal. Find out why. Running time: ~10 minutes.  Tickerized for Valuentum’s stock and ETF coverage universe. Transcript Hi this is Brian Nelson from Valuentum Securities, and this is the tenth edition of a series that I call “Off the Cuff,” where I get in front of the camera and I talk for ten minutes. This is what we have to talk about today. We have to talk about this concept: The Theory of Universal Value. Value does not exist in vacuums … Read more

Strategy Versus Tactics in the Dividend Growth Newsletter Portfolio

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Image Source: fauxto_digit We made a few tactical tweaks to the Dividend Growth Newsletter portfolio during 2017. Let’s walk through them, and how we’re out to win the war, not win every battle. < Note: The introduction is the same as that of the tactical analysis of the Best Ideas Newsletter portfolio. If you have already read through the introduction, please proceed to the section, Dividend Growth Newsletter Portfolio below. > By Brian Nelson, CFA I’m not going to reference The Art of War written by Chinese military strategist Sun Tzu some time in the 5th century, nor am I going to use any quotes from the military treatise (I think it’s too well-traveled of a topic), but I do … Read more

Divestitures Sweeping Through the Pharmaceutical Industry

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Image Source: Paul Sableman There has been a notable rise in the intent of the old guard in the pharmaceutical realm to divest some non-core assets via spin-offs into new, standalone companies. We believe we are on the cusp of a trend of simplification which we feel will aid in growing the top line sustainably, something that has become notoriously difficult for big pharma. By Alexander J. Poulos Eli Lilly Eli Lilly (LLY) mentioned on its recent quarterly conference call the need to explore strategic alternatives for its Elanco animal health unit, which is suffering from sales deceleration due to a decrease in end-user demand for its products. Elanco posted sales of $2.29 billion during the first three quarters of … Read more

Strategy Versus Tactics in the Best Ideas Newsletter Portfolio

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Image Source: Anna & Michal We made a few tactical tweaks to the Best Ideas Newsletter portfolio during 2017. Let’s walk through them, and how we’re out to win the war, not win every battle. By Brian Nelson, CFA I’m not going to reference The Art of War written by Chinese military strategist Sun Tzu some time in the 5th century, nor am I going to use any quotes from the military treatise (I think it’s too well-traveled of a topic), but I do believe the approach to portfolio management is much like that of a general on a path to win the war. Now, don’t get me confused: I’m not saying that portfolio management is actually like being in … Read more

Celgene Implodes

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The pharma/biotech industry operates in a boom-bust environment where the market cap of a company can post a meteoric rise or suffer a precipitous fall based on the data published from recently completed clinical trials. The industry remains one of the most innovative fields, but the quest for new products leads to constant disruption and a subsequent spike in volatility. Of late, the volatility pendulum for Celgene has swung in favor of the bears with the company posting a costly phase 3 failure. By Alexander J. Poulos Mongersen The vitality of the clinical pipeline, in our view, is the critical differentiator in the biotech space (XBI, IBB) due to the loss of revenue once patent protection lapses on existing products. … Read more

Novartis Gearing Up for Growth

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Dividend Growth Newsletter portfolio idea Novartis continues to grow its free cash flow stream while producing a string of products still in the infancy of their respective growth curves. The pharma/biotech realm remains bedeviled with patent issues that can disrupt cash flow generation once protection is lost, causing us to look for companies positioned for a fresh leg of growth. To that end, let’s take a look at Novartis’ pipeline, near-term potential, and how it relates to its dividend health. By Alexander J Poulos Alcon Division In Novartis’ (NVS) third quarter of 2017, results released October 24, its Alcon division posted an impressive constant-currency revenue jump of 7% from the year-ago period and a 23% year-over-year increase in core operating … Read more

Key Oncology Assets Powering Johnson & Johnson Higher

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Image Source: JNJ third quarter earnings presentation Shares of newsletter portfolio holding Johnson & Johnson continue their stellar run, posting new all-time highs on the heels of an impressive third quarter earnings report. Let’s take an in-depth review of key pharma product franchises as they relate to the performance of the stock. By Alexander J. Poulos and Kris Rosemann Immunology Johnson & Johnson’s (JNJ) largest pharmaceutical division remains Immunology–an area where the company continues to be a pioneer–but the division has begun to feel the strain of the coming biosimilar onslaught as its legacy molecule Remicade continues to cede ground to biosimilar competition. The drug posted a 7.6% year-over-year revenue decline in the third quarter of 2017 to ~$1.65 billion … Read more