Alexion Pharmaceuticals, Inc. (ALXN)

Mid-cap growth with solid balance sheet = takeover target

Russell 2000 long term growth 31-173%

Low Sales and Few Employees for Capital

earnings

eps is growing rapidly. good roe.

All you need to do is wait, Japan will be on board in 2010. Earnings will just keep growing for the next two years. No matter the economy. During this time just relax and wait for the stock to go up.

Underperform

growing royalty revenue stream from FDA approved monoclonal antibodies. More on the way to market. Good 5 year growth rate and reasonable longterm debt/equity ratio. Major downside is very poor return on equity. Alexion may have long term prospect for growth. If so we will see evidence of this in the next 2 years.

I hate stocks with big expectations and big PEs. Yes ALXN has a successful drug, but still way way ahead of itself in the stock price. Could legitimately be cut in half from here. All of these "tech growth spec" stocks should be avoided across the board; in this deep bear market they stand to be knocked to their knees.

Earnings report: 29 cents per share, up from a loss of 28 cents a year ago.

PHARM STOCK

One of few stocks in the world that seem just too expensive even though it operates in an industry outside of the FIRE sector of economy (FIRE = Financial, Insurance & Real Estate).
The valuation to earnings potential going forward is not worth it, nothing going for it on the dividend end, and there would be other companies in the sector that are much more desirable.



I'd sell this company to put my money elsewhere. In fact, I'd rather use that money and pour it across residential real estate, apartment buildings, other stocks, commodities, or bonds. Even if it survives the next decade, it will lag its peers and it will likely lag S&P 500.


SELL.


bearish on pbr, cog, io, mcf, chd, prgo, zep, psa, ccl, joe, celg, sndk, wms, brk-a, alxn, mygn, otex, apol, fun, uti, swn, goog, tm, bms, stec



These picks are within this CAPs account that is market neutral - all longs are offset by a short. All long & short picks are diversified across industries & world location to limit downside exposure. This CAPS account will maintain at the very least 20 picks and at the very most 80 picks. Picks will be ended in long/short pairs to remain neutral.

One word: Soliris, nice upwards trending also.

the time is right - solid company

Paroxysmal Nocturnal Hemoglobinuria -- extremely rare condition. Can Alexion justify an extremely high price for because of the rarity of the disease? Probably not. Notice that they are recording sales but not receiving cash. Their accounts receivables are going up, because they are not collecting payment. I think it will be very difficult to get insurance to cover soliris, especially at the current price-- if they do cover it, they will negotiate extreme discounts, e.g. paying only 20-30% of alexions's charge. Expect only about 30% of their accounts receivables to ultimately be converted to cash.

One might wonder why the run-up in price of a company whose claim to fame is just one orphan drug for a rare disease abbreviated PNH? I believe it's because of the future promise of this drug against diseases for which there has not been much successful intervention to date, such as Rheumatoid Arthritis. If this drug is found to work against diseases which ravage a large section of the human population, then ALXN may have found a huge future revenue stream.

What they need to do now, is find a way to develop those potential drugs, or partner - or perhaps sell themselves - to a larger company with the resources to do such development. I believe that's what drives the current interest in the stock. This is not a new thesis, and I feel most of this is baked into the stock price, so unless some even more endearing factual info. comes out, The stock will likely tread sideways for a while. If nothing happens in the next 3-6 mos., we might even see the stock price head lower.

Reuters, 10/4/07:

In a departure from the current status quo, Presidential front runner Senator Hillary Clinton would support stem cell funding and research.

That would be a boon for research efforts and for companies such as ALXN, which specializes in the development of biologic therapeutic products for the treatment of hematologic and cardiovascular disorders, auto-immune diseases, and cancer.

Alexion stock has endured negative earnings, and the P/S is 147. Any change in official policy could put this company and stock on a rocket ride to the moon. Buy and hold long.

I valuate this one at 351% intrinsic value.

Watch this thing go down.Muaahhh.Small rev,many shares,big talk=down