PFE

Galapagos’ Filgotinib Scores Major Win for Gilead Sciences

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Image source: Gilead second quarter earnings presentation Filgotinib posted stellar data in a recent phase 3 trial for the treatment of Rheumatoid Arthritis. In light of the data, we feel Galapagos and, by extension of their commercial partnership, Gilead Sciences possess a best in class molecule in immunology. By Alexander J. Poulos Key Takeaways Galapagos, which is ~15%-owned by Gilead Sciences, released stellar data of its lead compound Filgotinib.  Filgotinib again demonstrated a lack of clotting, which has torpedoed other competing promising molecules. In our opinion, Filgotinib is well on its way to a best in class profile which augurs well for Galapagos and its commercial partner Gilead Sciences. Though we continue to be cautious about any pharmaceutical/biotech idea, we … Read more

Pfizer: Lots of Moving Parts in a Generally-Inspiring Second Quarter

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Image Source: Pfizer We came away generally impressed with the progress at Pfizer during the second quarter as the company begins to replace its current patent protected line-up with next-generation treatments. Pfizer continues to gain political favor with its decision to forgo price hikes on its product line-up while announcing a re-organization of the business structure. By Alexander J. Poulos Key Takeaways There has been lots of political intrigue as Pfizer seeks to gain favor with the White House via rolling back its annual drug price hikes. The company announced plans to split into three companies, which we view as the first step towards a complete split of the company. In the second-quarter earnings report, released July 31, Pfizer raised … Read more

On Diversification

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Diversification is one of the most important components of equity investing. By Brian Nelson, CFA I wanted to touch base briefly today to see how everyone is doing, and how we can continue to make our website better. We’ve been getting a lot of great feedback on the ability to download our data in Excel and create your customized screens. Instead of having to click on a number of the web pages on the website to access the screens, all you have to do is download the Excel file, and use the standard sorting functionality in it. Let us know if you think we need to host a walk through of how to use the Excel screener. We think it … Read more

Valuentum’s Weighted Average Cost of Capital (WACC) Distribution

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The weighted average cost of capital is one of the most subjective measures in corporate finance, but it is also one of the most important ones. “The most important item over time in valuation is obviously interest rates…If interest rates are destined to be at low levels…It makes any stream of earnings from investments worth more money. The bogey is always what government bonds yield….Any investment is worth all the cash you’re going to get out between now and judgment day discounted back. The discounting back is affected by whether you choose interests rates like those of Japan or interest rates like those we had in 1982…When we had 15 percent short-term rates in 1982, it was silly to pay … Read more

Johnson & Johnson: Headline Risk But Business Solid

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We remain big fans of the steady hand displayed by the venerable Johnson & Johnson as the pharmaceutical bellwether continues to perform admirably. During its second-quarter results, we came away impressed with the continued strength in the Oncology division, which masks the deceleration in growth in Cardiovascular Disease. There continues to be headline risk with respect to talcum powder litigation, but J&J’s underlying business remains solid, in our view. By Alexander J. Poulos Examining J&J’s Franchise Strength We wrote up Johnson & Johnson’s (JNJ) second-quarter results July 19, “Johnson & Johnson Powers Ahead, Litigation Overhang Remains,” but we think a closer examination of the underlying trends of the three largest components of J&J’s pharma division will be helpful to readers. … Read more

AbbVie’s Outlook Remains Blurred

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Image Source: Global Panorama We remain bearish on the outlook for AbbVie as we do not believe the clinical pipeline will be able to adequately offset the loss of revenue when key product Humira loses patent protection beginning in October as a biosimilar enters the European market. By Alexander J. Poulos Key Takeaways AbbVie remains over-reliant on sales of Humira to drive top-line sales–a major red flag as the worldwide patent protection is about to lapse. Humira will lose patent protection in Europe, and thus in our view, we think we are about to witness peak Humira sales in 2018. We feel investors are over-estimating the productivity of the clinical pipeline, and while there is always a chance AbbVie may … Read more

Eli Lilly Looks to Bolster Its Presence in Oncology

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We are becoming increasingly impressed with Eli Lilly as the company boasts an enviable stable of new products that should power the company well into the next decade. Lilly is through the bulk of its patent trough, in our view, and its pipeline should set the company up for years of potentially uninterrupted revenue growth. Shares are not necessarily cheap, however. By Alexander J. Poulos Key Takeaways Lilly is aggressively building its oncology portfolio, and we think a new suite of recently-approved products should help power growth into the next decade. Lilly has opened the checkbook to acquire two additional novel compounds that underscore its desire to become a player in the oncology space. We view Lilly’s appetite for deal … Read more

Merck’s Dominance in Immuno-Oncology Expands Once Again

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Image Source: Merck Merck simply blew away the competition–the results are simply incredible. Keytruda is a gamechanger, and we think it will become the top-selling pharmaceutical once the patent lapses on Humira. By Alexander J. Poulos Key Takeaways Merck has solidified its lead in non-small cell lung cancer, which should power revenue growth well into the future. Merck will become increasingly more dependent on Keytruda for top-line growth, however, as we think its clinical pipeline remains uninspiring. The company’s dividend is a head-turner, but there are long-term risks to big pharma payouts. Shares look fairly valued to us. What is Immuno-Oncology? Immuno-oncology is the innovative field which seeks to augment the body’s own immune system to fight and hopefully eradicate cancer. … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

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To read the study, please click on the image to download the pdf document (pdf).

The Most Important Topic in Stock Investing

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President of Equity Research, Brian Nelson, discusses why price vs. value is the paramount consideration in stock investing. Brian Nelson, CFA: This is Brian Nelson from Valuentum Securities. Today, I wanted to talk about a number of investment concepts that I think are absolutely paramount for every investor to know.  The very first concept is price versus value, and this one is paramount to any investment process. Now I’m not just giving this lip service–this is just one of the core concepts of investing, equity investing. The reality of stock investing is that each company has a present value of future free cash flows that it generates, and those future free cash flows roll up to a fair value, the … Read more