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  • Hillenbrand: Low Oil Prices Offer Attractive Opportunity To Buy Excellent Capital Allocator [View article]
    Why is there a lower demand in plastics due to lower oil prices? I would think that since plastics become less expensive when the raw material price decreases demand for plastics would increase. What am I missing? Thanks.
    Jul 29, 2015. 11:56 AM | Likes Like |Link to Comment
  • Lindsay - Tough Times Continue, No Short-Term Triggers In Sight [View article]
    Thank you for the article. Very well done.
    Mar 27, 2015. 10:20 AM | Likes Like |Link to Comment
  • Should You Cancel Your Phone, TV And Internet Service Contracts? [View article]
    Dr. Morss,

    Thank you for your article. It was an understandable synopsis for those of us who read about this every day in the financial press, but having little understanding. Very much appreciated.
    Mar 17, 2015. 02:10 PM | Likes Like |Link to Comment
  • BioScrip's Turnaround Story Will Turn Around Some Heads [View article]
    Thank you for the article. However, comparing BIOS to HSP may be a bit of a stretch. The businesses are totally different. HSP is primarily a manufacturer of generic injectables, biosimilars and infusion pumps. BIOS simply performs infusions in home health. Perhaps a better comp would be AMED or LHCG.
    Feb 13, 2015. 09:56 AM | Likes Like |Link to Comment
  • Hospira: Regulatory Woes, Pipeline, And Potential Takeout Offer Asymmetric Multi-Bagger Opportunity [View article]
    Thanks Daniel.
    Feb 5, 2015. 11:36 AM | Likes Like |Link to Comment
  • CareFusion: Increasing ROIC Provides Significant Upside Even With Modest Top-Line Growth [View article]
    Some wrap up comments in the wake of the BDX acquisition of CFN. We think CFN has been grooming itself for such an event since it was spun out from Cardinal in 2009. Its medical management and especially infusion pumps business complement BDX quite well. BDX makes needles, syringes, catheters and other related devices. Carefusion's infusion pump business makes the combination a one stop shop for hospitals. Like other recent medical device deals, BD is reaching for scale and, with the complementary medication management business extends that platform and provides just that.

    Becoming a part of BD also jump starts CFN's effort of overseas expansion. 75% of the companies revenue is domestic. International was the next big leg of growth for CFN, but it was a rather tough row to hoe as the company needed to go up against players like Braun and Hospira in international markets. BD already has scale and gravitas in those markets, with 60% of its revenue coming from overseas, 25% of it from emerging markets. The latter may be a trouble spot for the moment, but in the long-term it represents Carefusion's best opportunity to accelerate top line growth. Importantly, it enables the company to diversify away from the US where infusion pumps have been under regulatory scrutiny for several years.

    Based on where CFN is today, we believe the purchase price is adequate. The company had made many operational improvements, but returns on invested capital were still lower than we would have like, but slowly continuing to improve. Based on our FY 2105 estimates the deal is at about 12.5x EV/EBITDA. If BD can reduce SG&A by a third that drops to approximately 9.6x, not far from its current valuation.

    In the healthcare environment in the US, scale is key as both a marketing tool and cost efficiency, as CMS is more aggressively looking to reduce reimbursement and move from fee-for-service to patient-outcomes as the key for rates. The BDX/CFN combination provides the bigger BD with just that; plus, new products lines to push through BD's already established international infrastructure. On paper it looks like an excellent deal at a decent price.
    Oct 6, 2014. 06:02 PM | Likes Like |Link to Comment
  • Forest Labs: Finally Time To Buy Again - Favorably Skewed Risk-Reward In The Next 24 Months [View article]
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    The lesson of Forest Labs? Follow the management team. Brent Saunders was brought into the company basically to appease Carl Icahn. A great move we thought since he had been a protege of Fred Hassan, who had experience in turning around big pharma companies. Howard Solomon, the CEO for 36 years, was bumped up to Chairman.

    Solomon had a very successful run with Forest for many years. However, there came a point to where he was no longer the CEO that the company needed. Under his leadership, the last few years was marred with major patent expirations with little to take those products place, despite a massive cash war chest. Mr. Solomon never seemed interested in using his overly pristine balance sheet to fill in the product gaps; preferring instead to be patient in the growth of Forest's new product portfolio. To be fair, much of the "turnaround" (if Saunders was there long enough before the ACT merger to call it a turnaround) strategy Saunders articulated upon assuming the head role involved pushing those drugs Mr. Solomon had put in place. However, he forcefully articulated a strategy of using the balance sheet to push drive top line growth. The stock began to run as investors gained confidence.

    Other specialty pharma companies had similar experiences in the past few years. IPXL and ENDP within the last year with both stocks doing well. HSP and VRX were similar stories from a few years ago. The point is that there are only so many really good management teams out there. Follow the ones that can make you money. If your thesis goes to hell at least you know you have the right person at the helm.
    Sep 7, 2014. 10:28 AM | Likes Like |Link to Comment
  • Forest Labs: Let The Good Times Roll - Reward To Risk Still 2:1 [View article]
    The lesson of Forest Labs? Follow the management team. Brent Saunders was brought into the company basically to appease Carl Icahn. A great move we thought since he had been a protege of Fred Hassan, who had experience in turning around big pharma companies. Howard Solomon, the CEO for 36 years, was bumped up to Chairman.

    Solomon had a very successful run with Forest for many years. However, there came a point to where he was no longer the CEO that the company needed. Under his leadership, the last few years was marred with major patent expirations with little to take those products place, despite a massive cash war chest. Mr. Solomon never seemed interested in using his overly pristine balance sheet to fill in the product gaps; preferring instead to be patient in the growth of Forest's new product portfolio. To be fair, much of the "turnaround" (if Saunders was there long enough before the ACT merger to call it a turnaround) strategy Saunders articulated upon assuming the head role involved pushing those drugs Mr. Solomon had put in place. However, he forcefully articulated a strategy of using the balance sheet to push drive top line growth. The stock began to run as investors gained confidence.

    Other specialty pharma companies had similar experiences in the past few years. IPXL and ENDP within the last year with both stocks doing well. HSP and VRX were similar stories from a few years ago. The point is that there are only so many really good management teams out there. Follow the ones that can make you money. If your thesis goes to hell at least you know you have the right person at the helm.
    Sep 5, 2014. 05:36 PM | Likes Like |Link to Comment
  • Impax Labs: Beyond The Hayward Debacle, High Reward, Manageable Risk [View article]
    IPXL is up 52% and nearing our $35 price target set in October 2013. Much of what was anticipated in that report has occurred; most notably, the appointment of a seasoned CEO, the re-filing of Impax lead branded compound Rytary and progress in the remediation of the Hayward plant. The new PDUFA for Rytary is October 9, 2014. Management must be confident that Hayward is sufficiently remediated for the FDA to seriously consider approving Rytary. In addition, Impax launched the authorized generic version of Sanofi’s Renvela which should generate an additional $70 milllion in operating profit, significantly boosting consensus estimates.

    Although we believe there is additional opportunity for upside, much of the initial upside has been priced in with a reward:risk of 1.4:1 considerably lower than 2:1 of October 2013. Our updated DCF derives a price target of $45 (up from $35) with a downside of $18 (up from $15). The downside is still considerable because the Hayward difficulties are not yet completely resolved which still could impede an approval of Rytary. At a minimum, for those holding large positions, we recommend taking some capital off the table. That said, additional moves by the company and M&A could spur further gains.
    Jun 20, 2014. 05:21 PM | Likes Like |Link to Comment
  • Premier Inc.: Healthcare Crisis Creates A Growth Environment [View article]
    The company earns administrative fees for purchasing medical supplies, drugs, equipment for its members. Also, hospitals pay a fee for licensing its SaaS platform in whole or just for specific modules.
    Jun 5, 2014. 01:35 PM | Likes Like |Link to Comment
  • Long - Premier, Inc.: Newly Traded Company Offers Significant Upside [View article]
    Your analysis is very interesting. I do think there is an issue with the peer group. Those companies are all healthcare, but they are all in different industries within healthcare and are driven by different factors. A small cap biotech company is drastically different than a home health company which is drastically different from a diagnostic company etc. I agree with your conclusion that there is upside and the stock is relatively unknown and thus under-appreciated: however, it would seem for your EVA model to be accurate the peer group needs to be driven by factors more closely related to PINC.

    Enjoyable read. Thanks.
    Apr 21, 2014. 04:15 PM | 1 Like Like |Link to Comment
  • GTx Inc.: Well, The Package Is Late To Arrive, But It's On Its Way [View article]
    Speaking as a long time follower of GTx and former analyst who covered the company, Cora has written some of the most thoughtful research on the company I've seen. She has provided real insight into the clinical meaning of the data and the commercialization potential of the pipeline.

    It is unlikely that GTx will run out of capital. The Chairman of GTx, Pitt Hyde, is the founder, former chairman of Autozone and a billionaire. He provided much of the seed capital for the company and has been willing to stick with the company through some difficult times. Given the multiple opportunities GTx has in front of it, Mr. Hyde can bring to bear the capital necessary to see these opportunities through to fruition. Moreover, as Cora has so adeptly pointed out, the data from the various compounds are intriguing enough to entice other investors or strategics to come onboard.

    Nothing in small biotech is a layup, but GTx appears to be on the cusp of achieving what Dr. Steiner began years ago. It has been a longer, bumpier road than anyone expected, but, then again, it usually is for companies with innovative therapies. With the clinical disappointments GTx has had, most companies would have already gone by the wayside, GTx's thoughtful approach to its clinical programs has kept it alive to fight another day and the risk-reward here is incredibly favorable.
    Feb 20, 2014. 11:53 AM | 2 Likes Like |Link to Comment
  • Momenta: Impending Approval Provides Price Support With Excellent Upside Potential [View article]
    user 7310991,

    Thank you for your comments. Maybe I did not convey my thinking as clearly as I should have.

    First, I agree that the Copaxone approval is the near term catalyst. I hope I made that clear. I also agree that the 50/50 split is huge for the company. And had Teva been able to get the 3x per week dosing earlier a more significant patient switch may have been possible, but now I believe you are correct that it is not enough to defend the franchise unless there is a significant price reduction.

    Second, I hope you didn't take from the article that I have an unfavorable view of the technology or the business. It is highly likely that the technology pans out in biosimilars. If it does this could put Momenta in a unique regulatory and clinical positions versus competitors, which would make the valuation much higher than what I have modeled.
    Feb 12, 2014. 05:56 PM | Likes Like |Link to Comment
  • ISRG: Further To Go Before The Clouds Lift - Short For 50% Gain, Limited Loss Potential [View article]
    It's early. $40 on $380 stock is 11%, hardly a home run.

    Time will tell.
    Jan 11, 2014. 12:49 PM | 1 Like Like |Link to Comment
  • ISRG: Further To Go Before The Clouds Lift - Short For 50% Gain, Limited Loss Potential [View article]
    Gary,

    If one waited until there were an FDA investigation or a class action lawsuit or an adverse outcome of a lawsuit the opportunity would be missed. Equity analysis is not about waiting on an event to happen and then investing. The market does not look in the rear view mirror. There have been more patients coming forward. Whether those patients come forward through attorneys or have reported adverse events to regulatory authorities is irrelevant. It's the numbers of patients and the increasing spotlight on the adverse outcomes that does matter.

    You are also missing another important point. The customer's that are supposed to be buying da Vinci have concerns at this point and are less likely to purchase until questions are answered. Whether their concerns are well-founded remains to be seen, but until then perception is reality.

    There is a cloud of suspicion over the stock. Another quarter of missed expectations will send ISRG lower. There is considerable evidence this is likely.
    Jan 3, 2014. 10:26 AM | 2 Likes Like |Link to Comment
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