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Halozyme: Growing Biotech Company With Good Upside Potential

Dec. 04, 2021 1:49 AM ETHalozyme Therapeutics, Inc. (HALO)6 Comments
Vladislav Kolomeets profile picture
Vladislav Kolomeets


  • The financial performance of HALO is growing at an extremely high rate, and this dynamic is expected to continue until at least 2027.
  • The company's market prospects are undeniable, with more than 79 drugs approved by the FDA, and the company continues to negotiate agreements and penetrate various segments of the industry.
  • According to our valuation, the upside potential to the fair price is 25%. We are bullish on HALO.
Doctors working in laboratory during pandemic

Morsa Images/DigitalVision via Getty Images

Investment Thesis

Halozyme (NASDAQ:NASDAQ:HALO) operates in a growing and promising market and shows rapid financial performance growth. According to management's expectations, revenue will grow at a CAGR of 20% (minimum) until 2027. Management's revenue expectations look realistic. By reducing operating costs as a percentage of

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Vladislav Kolomeets profile picture
It is generally accepted that the increase in the number of securities in the portfolio certainly leads to a decrease in the total investment risk. This statement, originated in academia, is built on two important assumptions: investment opportunities must have the same mathematical expectation (range of all possible relative outcomes including negative, taking into account the probability) and not to have cross-correlation (i.e., the movement of some securities should not repeat the movement of others).However, this does not happen in life, and we are forced to work hard to find attractive opportunities for capital investments. Let’s say we have two companies with the same expected return, but one carries a risk of capital loss of 5% (suppose that risk is measured exclusively quantitative indicators, although this is not the case), and the second - 1%. Wider range of expectations of the first company only increases the overall risk portfolio. We prefer to focus on a few companies with high potential growth and near-zero risk of loss invested capital rather than excessive diversification that only reduces profitability and increase the risk. In other words, investment is by no means solving a math exercise. Investment is a gold washing process (it is desirable that the prospector also possessed Picasso's view on everyday things). Another question is where to find gold? If you want to beat the market, you have to look where the other 99% of the market participants do not. We research undercovered stocks from around the world looking for growth, deep value, and distressed companies.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (6)

I'll take the money in 2022 - 2024 and then sell, if I see no new patents. In the eman time, there is money to be made!
AJ111 profile picture
Where the growth comes from after 2027 when their today's money making patents all expire? The issue with this stock is that, no one can explain (short of coming up with new money making patents) where the growth comes from after 2027. Management sure has not explained it except doing some power point hand waving slides! So why would anyone want to invest in the stock when there is no clear understanding of where the growth comes from after 2027 for the company's entire business model is based on loyalties collected from its current patents.
Vladislav Kolomeets profile picture
@AJ111 that's right! If future drivers were known, you would not see such prices
@AJ111 Check out the Evercore ISI webcast from this week with Helen Torley (CEO). She is addressing the 2027 IP issue in it.
@Optiondude , what did she say about that 2027 issue? 6 years for M/A activities to happen is one solution—I have not read/heard the Evercore interview/webcast.
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