Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Is Biogen An Offer Pfizer Can't Refuse?

By

With a market cap of $19.25 bln, Biogen would seem to be a pretty nice fit for the drug-starved giant Pfizer.

PrintPRINT
Calogero: "Is it better to be loved or feared?"
Sonny: "That's a good question. It's nice to be both but it is difficult... but if I had my choice, I would rather be feared. Fear lasts longer than love."

-A Bronx Tale


A Bronx Tale is a great movie you can take a lot of life lessons from, but for me the love versus fear message in particular rings true everyday regarding the market. Everybody has loved the market the last few months. Each day is another confetti party as the Dow continues to make new highs.

Yesterday, however, the dark side reared its ugly head and fear took hold: if you happened to watch any of the market coverage yesterday you would have sworn it was the end of civilization. Fear not, I say!

While I agree that it seems like this subprime contagion has oozed its way into other areas and where I also agree that the credit markets may be getting a bit squirrelly - corporate America by and large has never looked better. Say what you want about Sarbanes-Oxley, but it seems to me that U.S. companies have never been run better and balance sheets by and large have never been in better shape.

Now one can argue that Pfizer's (PFE) sale of its consumer brands business to Johnson & Johnson (JNJ) last summer for slightly north of $16 bln could fetch around $20 bln with the M&A frenzy of today. That being said, although things are terrible for Pfizer on the pipeline front, its balance sheet, due in part from that sale to JNJ, is looking pretty good. I am thinking that Pfizer is going to put that money to work and I need look no further than Biogen Idec (BIIB) as a potential candidate.

Yesterday, Biogen reported a solid 2Q and guided higher for the balance of the year. It also said revenue growth should come in anywhere between 16%-18%. But I don't think this is just an earnings story and BIIB is not your typical biotech company. With four major drugs, in Avonex, Rituxan, Tysabri and Zevalin, Biogen has about four times as many drugs as the usual run-of-the-mill biotech. On top of that, on May 29 it announced a $3 bln share repurchase plan, which again is rather atypical of your usual name in that space.

Now with the stock trading with a $56 handle we have seen quite a move since March, when the stock bottomed out around $43. But it seems to be firing on all cylinders right now and, with a Thomas Weisel Partners upgrade this morning, the tailwinds seem to be growing.

With a market cap of $19.25 bln, Biogen would seem to be a pretty nice fit for the drug-starved giant Pfizer. But even without any M&A chatter Biogen has it all going on right now.

To borrow a scene from A Bronx Tale, let's just hope Biogen is not Kryptonite at Aqueduct and I am not Eddie Mush cheering him on.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE