MRK

Understanding the Chartered Financial Analyst (CFA) Designation

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“Among the countless finance degrees around the world, the Chartered Financial Analyst qualification has become the gold standard.” – Financial Times, 13 August 2010 “[The] qualification is roughly equivalent to a specialized postgraduate finance degree, including a mixture of economics, ethics, law, and accountancy… Whereas there are tens of thousands of finance degrees available around the world, ranging from the excellent to the worthless, there is only one CFA, managed and examined by an American association of financial professionals, the CFA Institute.” – the Economist From the CFA Institute: “The Chartered Financial Analyst (CFA) charter is an investment credential that, for more than 60 years, has been the global standard for embodying the integrity, dedication, and advanced skills needed to … Read more

Gilead’s Harvoni Sales Dip Considerably in the US

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Image Source: Gilead’s second quarter report “There’s nothing quite like market instincts. They can’t be taught from reading textbooks, in the classroom, in a valuation model, or even with years and years of experience. It’s the intangibles that sometimes count the most…When we removed Gilead (GILD) from the portfolio of the Best Ideas Newsletter, “Alerts: High-grading! GILD–>JNJ… (Jan 2016),” we just knew something wasn’t right. Sure the introduction of Merck’s (MRK) once-daily single-tablet combination therapy, Zepatier, a significantly less expensive therapy to Gilead’s prized hepatitis C franchise was one major concern at the time, but the market is often not this inefficient when valuing equities. Almost counterintuitively, it became worrisome to us that for a company that was generating so … Read more

Big Pharma 1Q Earnings Roundup, Part II

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Image Source: Paw Paw Companies mentioned: ABBV, AGN, BMY, AMGN, MRK, PFE. AbbVie (ABBV) Riding Humira to the End AbbVie’s performance in the first quarter of 2016 was nothing short of impressive, as the firm grew revenue by more than 18% on an as reported basis from the year-ago period. Humira (arthritis), the company’s headlining drug, sales increased nearly 15% as reported. New drug Imbruvica (leukemia) showed solid momentum in the quarter, and AbbVie received two approvals for the expansion of the Imbruvica as a first line therapy for chronic lymphocytic leukemia. The treatment is expected to play a key role in the future of the company, especially after its patent on Humira expires in December of this year. The … Read more

Gilead: What’s Your Long Term Thesis?

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Shown: Pricing pressure continues to hurt Gilead’s gross margin; source: Gilead’s first-quarter 2016 presentation. We’re still sleeping better at night knowing that we avoided the first-quarter blowup at Gilead (GILD), “Gilead Disappoints, Harvoni Sales Drop 16% (April 2016).” Sales of Harvoni in the US dropped like a rock from the year-ago period, and as Gilead throws away its cash at buybacks to bolster accounting earnings per share, no longer does it hold the balance sheet it once did. Sure, something can be said about having ~$21 billion in cash, but it kind of loses its luster matched up with a similar amount of liabilities, as is the case with Gilead. Remember – it’s net cash that matters. To a large … Read more

Gilead Disappoints, Harvoni Sales Drop 16%

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Image Source: Gilead By Brian Nelson, CFA “They” say nobody saw this coming, but then again not everybody follows Valuentum’s research and analysis. That’s a good thing. We were starting to doubt our de-risking maneuver in the Best Ideas Newsletter portfolio that we made in January, “Alerts: High-grading! GILD–>JNJ; EBAY–>FB (January 2016),” in light of Gilead’s shares recovering nicely along with the market advance. However, the hep-C giant’s first-quarter report, released April 28, looks like it will be the catalyst to bring shares back down to earth, fair or not. Given some of the comments/questions we’ve received in recent months, we think it is worth noting that since the January 29 transaction alert, shares of Johnson & Johnson (JNJ) have … Read more

What Gilead’s Patent Miscue Means for Shareholders

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Source: Gilead Sciences Corporate Fact Sheet (pdf) By Brian Nelson, CFA There’s nothing quite like market instincts. They can’t be taught from reading textbooks, in the classroom, in a valuation model, or even with years and years of experience. It’s the intangibles that sometimes count the most. When we removed Gilead (GILD) from the portfolio of the Best Ideas Newsletter, “Alerts: High-grading! GILD–>JNJ… (Jan 2016),” we just knew something wasn’t right. Sure the introduction of Merck’s (MRK) once-daily single-tablet combination therapy, Zepatier, a significantly less expensive therapy to Gilead’s prized hepatitis C franchise was one major concern at the time, but the market is often not this inefficient when valuing equities. Almost counterintuitively, it became worrisome to us that for … Read more

Key Treatment Momentum Drives Big Pharma

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The momentum of key drugs and treatments is often a solid indicator for the coming performance of a pharmaceutical firm. Growing competition and other market pressures out of a company’s control can often cause material ebbs and flows in financial performance, making a strong and stable pipeline necessary to sustained success. As we walk through the results from some of the biggest names in the pharmaceuticals industry, let’s get a feel for the trajectory of each firm’s drug portfolio and pipeline moving into the rest of 2016. AbbVie (ABBV) AbbVie reported a quarter of strong growth January 29, as adjusted net revenues jumped more than 24% on an operational basis, and GAAP net revenue increase more than 17% from the … Read more

Your Hard-Earned Money

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By Brian Nelson, CFA It was Thursday afternoon, February 11, crude oil prices just hit a 13-year low, and the S&P 500 (SPY) was about to break below key technical support. Then, just as the markets were to fall further, rumors again emerged that OPEC may be scheduling a meeting to curb crude oil output, driving crude oil prices from the depths and the market higher off technical support. A barrel of crude oil continues to trade below the $30 mark, but it was quite the “save.” From where we stand, the market hasn’t been this fragile than at any time during the past decade or so, including during much of the Financial Crisis. Optimists may be whistling past the … Read more

Early Read: Gilead Guides Revenue to Decline in 2016, Below Consensus

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Gilead’s (GILD) fourth-quarter report came and went, and it was just fine. Strong revenue and earnings growth and phenomenal free cash flow generation were all the rage in the quarterly press release. It even announced a new $12 billion share buyback program and upped its dividend 10% starting in the second quarter. We love the company that cured hepatitis C (“hep C”), but we no longer include it in the Best Ideas Newsletter portfolio. No quarterly report could ever cure our biggest concerns.   To put it straight, Gilead’s outlook for 2016 is nothing to write home about, and the probability of intense pricing competition in its blockbuster hep-C franchise taking its toll in 2017 and beyond is something even … Read more

Alerts: High-grading! GILD–>JNJ; EBAY–>FB

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Pictured: The long-term view of Gilead’s Harvoni franchise has blurred. Prices updated, as of 1:36pmCT. By Brian Nelson, CFA We were very pleased by the market action of Friday, January 29, with the top weightings in each of the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio performing extremely well. Visa (V), the largest weighting in the Best Ideas Newsletter portfolio (7%+), is simply “on fire,” with the company trading ~5% higher on the session at the time of this writing. The high end of our fair value range of $90 per share for shares is starting to look within reach for the credit-card network, “.” Visa generates an operating margin in the mid-60% range (not a typo), and there … Read more