Category Archives: biib

Biogen Price Momentum Indicator

Below is the Price Momentum Indicator for Biogen Inc. (BIIB).

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Biogen Management Should Provide Proper Sell Signal

In recent articles we’ve noted that, based on the price action, Biogen Idec (BIIB) is worthy of selling. Biogen continues to register new highs after first showing up on our Nasdaq 100 watch list on October 30, 2009. The performance of Biogen Idec since October 2009 has been over 135%.

It is worth noting that the last time Biogen (BIIB) was at a high on October 15, 2007, the board of directors approved a plan to put the company up for sale. Biogen retained Goldman Sachs and Merrill Lynch to act as advisors for any eventual deal. The announcement of the intent to sale the company came after-hours on Friday October 12, 2007. After-hour trading of Biogen stock pushed the price up over 18% resulting in the high for the stock the following Monday.

Our interpretation of management’s desire to sell “at the top” in 2007 reflects that they didn’t expect the price to go much higher and with a market that had plenty of liquidity the best option would be to seek alternatives. The management of Biogen was accurate in their choice and timing. Biogen stock fell by over 50% after the announcement of the sale of the company.

For current holders of Biogen stock, we’d be paying close attention to the management team for indications of a merger or sale of the company. Any indication of managment "cashing out" should provide ample insider information about the expectations going forward.

Source:
Bowe, Christopher, and James Politi. "Biogen shares soar as group considers sale." Financial Times. Saturday October 13, 2007.

 
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Sundry Items

  • Biogen Idec (BIIB) and Teva Pharmaceutical (TEVA) are doing a dance as both are members of the Nasdaq 100 index. As one stock is at a new high the other is reaching a new low. The two-step that is being done by the stocks is quite amazing. Back in October 30, 2009, we pointed out that the concentration of biotech stocks at a new low meant that they were possible takeover candidates. From that list in 2009, GENZ and CEPH were actually tendered buyout offers. 3 of the remaining 5 biotechs have had gains of 40% or more since then. The remaining two stocks, Amgen and Gilead Sciences, are essentially at break even. BIIB has been the leader in terms of price appreciation with a gain of over 100% since October 30, 2009. At that time TEVA was near a new 52-week high. However, BIIB’s recent success is actually impacting the performance of TEVA since both companies are involved in the development in MS drugs. TEVA is now on our new low list for the Nasdaq 100 and should be consider as a top acquisition candidate for your portfolio. Anyone who bought BIIB based on our watch list from October 2009 should now consider securing a large portion of the gains and possibly funding the purchase of TEVA with the proceeds.
  • Our September 5, 2009 article titled “Silver Should be the Focus” recommended that anyone interested in investing in gold should instead put there investment funds towards silver. The chart below reflecting the silver (SLV) and the gold (GLD) ETF demonstrates the accuracy of our recommendation and highlights what we believe is likely to come. Those interested in determining an entry point should reference our latest article on April 14, 2011 highlighting the downside targets for precious metal stocks based on the Philadelphia Gold and Silver Stock Index (XAU).

  • The results are in and our article titled “A Comparison Between Dividend Strategies” has demonstrated, so far, that the New Low approach has returned 19.52% while the list of stocks we compared ourselves to has returned only 1.39%. We believe that, although the two list have similar companies, the quality and timing has made the difference in performance. As a note, we only made the comparison because the author of the other list indicated that it was for the purpose of trading. In our view, stocks that can be considered for trading are worth comparing since we only aim for 1-year performance.

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Genzyme Corp: Value is Finally Being Recognized

There has been a lot of news about Genzyme (GENZ) being considered as a takeover candidate by Sanofi-Aventis (SNY). Typically, rumors are simply that, nothing more than prattle about a washed up company that has little or no life remaining. However, we have demonstrated that discussions of Genzyme (GENZ) being taken over are not so far fetched.
On October 17, 2009 (article link), we had only four companies that were on our Nasdaq 100 Watch List that was within 20% of their respective 52-week lows. This was in contravention to the overall market; which was racing higher every day. So compelling were the companies on the list that we felt it was necessary to give mini-profiles on their value propositions.
Genzyme (GENZ) was one such company that was on that list. We included Genzyme (GENZ) as the last company we profiled since we felt that it was “…a far superior value proposition.” This was despite the fact that Genzyme (GENZ) was the farthest from the new low among the companies on the list.
On October 30, 2009 (article link), we weren’t surprised that drug and medical device makers dominated our list of companies near a new low. In that posting to our site we said, “The continued undervaluation of these companies makes them prime targets for acquisition…” Genzyme (GENZ) was on the list and trading at $50.60. The performance of the stocks that were on the on the October 30 watch list is as follows:

The average gain for the group was 15.32% in 9 months. The worst performing stock has been Gilead Sciences (GILD) with a decline of 22.21%. The best performing stock has been Biogen (BIIB). Our sanguine view on Gilead Sciences (GILD) may be worth reviewing since it has fallen so much since October 30, 2009.
Genzyme has already indicated that they’re not going to accept the Sanofi-Aventis (SNY). This opens the door for competing bids, which should push the price up. Our view at this time is that Genzyme is strictly a speculation, at best, given the rise of nearly 33% since our mention of being a takeover candidate in October 2009.

Nasdaq 100 Watch List

Below are the Nasdaq 100 companies that are within 21% of their respective 52-week low. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and considerable due diligence.

Name (SYMBOL) Price P/E EPS Yield P/B Pct from Yr Low
Activision Blizzard, Inc (ATVI) $10.69 45.49 0.24 1.40% 1.25 7.65%
Amgen Inc. (AMGN) $54.69 11.61 4.71 0.00% 2.42 15.14%
Apollo Group, Inc. (APOL) $52.78 13.2 4 0.00% 6.18 1.11%
Biogen Idec Inc (BIIB) $50.13 15.18 3.3 0.00% 2.32 20.07%
Cephalon, Inc. (CEPH) $60.69 12.1 5.01 0.00% 1.98 15.49%
Electronic Arts Inc. (ERTS) $17.42 0 -2.31 0.00% 2.28 10.96%
Genzyme Corporation (GENZ) $50.43 122.4 0.41 0.00% 1.83 7.09%
Gilead Sciences, Inc. (GILD) $37.78 12.12 3.12 0.00% 4.74 0.61%
Logitech (LOGI) $14.74 40.72 0.36 0.00% 2.69 14.89%
QUALCOMM (QCOM) $37.30 19.89 1.88 2.00% 3 5.88%
Ryanair Holdings plc (RYAAY) $24.72 0 0 0.00% 0 4.39%
Sigma-Aldrich (SIAL) $54.23 18.5 2.93 1.20% 4.01 21.00%
Staples, Inc. (SPLS) $22.12 21.62 1.02 1.60% 2.39 18.16%
Stericycle, Inc. (SRCL) $56.70 26.83 2.11 0.00% 5.49 21.00%
Symantec Corporation (SYMC) $16.12 18.49 0.87 0.00% 2.89 15.39%
Yahoo! Inc. (YHOO) $16.39 29.37 0.56 0.00% 1.84 17.32%

Watch List Summary

The stock that fell the most from last week's watch list was Apollo Group (APOL) which fell -3% for the week. Yahoo! (YHOO) gained the most for the week with 7.19%.

In all, the Nasdaq 100 Watch List of last week gained 1.15% as compared to the Nasdaq 100 index which gained 3.12%.  As quickly as Cintas (CTAS) got on the Watch List is as quickly as it came off the watch list.  Although CTAS is not on the watch list, I would still continue to follow the company for additional analysis and possible purchase at the right price. 
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A View on the "Buy Low, Sell High" Concept

As the old investment adage goes, "buy low and sell high." However, the act of buying low has a few complications which hasn't been easily resolved. One problem is knowing when a stock's price is actually at a low price or not. Most people confuse the absolute level of a stock price with being low. For example, if a stock is selling for $2 then a person might think that this is a great price to acquire the shares. However, if $2 is the new high for the price and one year ago the old low was $0.25 then $2 is actually very high.

One way that the New Low Observer (NLO) has managed to isolate whether a stock is at a low price is by waiting until the stock is within 20% of the new low. This approach isn't a cure for what ails the average investor. However, it does allow average market participants the opportunity to investigate quality companies for potential price increases. The new low of a stock automatically implies that value has been created especially if the company in question can survive as a going concern. This is counter to most information coming out of the Wall Street media machine. Typically, analysts on Wall Street recommend stocks that have risen far above the low before initiating coverage on a stock.

While there are 4336 individual stocks that can be bought on American stock exchanges, NLO has determined that there are basically only 383 companies that warrant your attention. The first group of companies are known as the Dividend Achievers (excel list of companies). These 283 companies are tracked by Mergent's based on their ability to increase their dividends every year for over 10 years in a row as a minimum requirement. It goes without saying that these companies pay some kind of dividend with yields that range from over 5% to less than 1%.

The second major group of companies tracked by NLO are the constituents of the Nasdaq 100. In our earlier forms as Dividend Inc. and Arti Invest, we believed that only Dividend Achievers were worth tracking since the dividend payment was verifiable regardless of "accounting" inconsistencies that are commonly found with "other" companies. The performance of this approach has been well documented and proven quite profitable.

However, the reality of the stock market dictates that we widen our perspective on companies that might afford significant opportunity with reduced risk. We, at NLO, decided that the Nasdaq 100 was the next obvious choice. After all, most mutual funds are bound to invest in these companies regardless of their unwillingness to pay dividend income. Additionally, companies in the Nasdaq 100 have solid reputations with higher prospects for growth over the long term.

One recent example of the benefit of tracking and research companies posted on NLO, as opposed to those from the Wall Street media machine, is Stericycle (SRCL). SRCL last appeared on our Nasdaq 100 watch list on October 30th. After being on our watchlist since the July 24th initiation of our website, SRCL has managed to climb from the low of $47.76 to the most recent high of $58. This is an increase of 18% from the July low and 21% from the October low and 11.54% from the breakout above our watch list range of being within 20% of the 52-week low.

NLO can be easily contrasted with the recent short-term buy recommendation placed on SRCL by Zack's Investment Research. In a tiny blurb issued today, Zack's Investment Research indicated that SRCL's stock had been in an oversold state based on the stochastics which indicated or implied that the stock was likely to go higher in the near term.

Unfortunately, offering up information about SRCL long after the stock has risen by at least 18% doesn't serve the small investor. After all, isn't the mantra "buy low, sell high?" It is strange to note that no analysts covering SRCL (in the following link) issued a buy recommendation on the stock after February 2004, even though there has been tremendous opportunities to buy in October 2008, February 2009, May 2009 and October 2009.

SRCL is only one of the companies that has been on the NLO Nasdaq 100 Watchlist that performed exceptionally well after getting off the list. Below are other Nasdaq 100 companies and their performance since getting within 20% of the new low:

It should be noted that the above companies are almost the entire list of companies that have appeared on the Nasdaq 100 Watch List. So far, this implies that quality Nasdaq companies could be investigated for speculative opportunities near the new low. Hopefully this approach can provide a reasonable approach to buying low with the prospect of selling higher. Follow along with us as we continue to investigate the speculative opportunities of the Nasdaq 100. -Touc

Nasdaq 100 Watch List

Below are the Nasdaq 100 companies that are within 20% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models or are about to go out of business. These companies are deemed highly speculative unless otherwise noted.

Symbol

Name Price P/E EPS Yield P/B

% from Low

GENZ

Genzyme

48.78

27.81

1.75

N/A

1.68

3.59%

GILD

Gilead

42.83

16.56

2.59

N/A

6.90

5.44%

APOL

Apollo Grp

58.40

15.57

3.75

N/A

7.67

10.63%

CEPH

Cephalon

59.04

16.32

3.62

N/A

2.05

12.35%

ERTS

EA

16.72

N/A

-4.06

N/A

2.02

17.42%

ILMN

Illumina

27.88

38.78

0.72

N/A

3.40

19.71%

BIIB

Biogen

50.07

16.76

2.99

N/A

2.18

19.93%

Nasdaq 100 Watch List

The following are Nasdaq 100 members that are within 20% of the 52-week low:

  • Genzyme Corp. (GENZ) at $49.74 within 5.63%
  • Apollo Group (APOL) at $56.58 within 7.18%
  • Cephalon, Inc. (CEPH) at $58.94 within 12.16%
  • Electronic Arts (ERTS) at $16.11 within 13.13%
  • Gilead Sciences (GILD) at $46.42 within 14.28%
  • Ryanair Holdings (RYAAY) at $25.34 within 16.40%
  • Biogen Idec (BIIB) at $48.65 within 16.53%
  • Pharma. Prod. Dev. (PPDI) at $21.41 within 16.53%

Nasdaq 100 Watch List

The following are the Nasdaq 100 members that are within 20% of the 52-week low:

  • Apollo Group, Inc. (APOL) at $55.99 within 1.16%
  • Cephalon, Inc. (CEPH) at $58.26 within 10.87%
  • Genzyme Corporation (GENZ) at $52.28 within 11.02%
  • Pharma. Products Dev. (PPDI) at $20.93 within 16.47%
  • Gilead Sciences, Inc. (GILD) at $46.26 within 17.50%

It is interesting to note the percentage change that has occurred in last week's Nasdaq 100 watch list. Last week's list had the following one week percentage change:

  • APOL down 1.94%
  • CEPH up 6.74%
  • GENZ up 3.32%
  • PPDI down 2.88%
  • GILD up 8.72%
  • BIIB up 8.62%
  • SRCL up 3.69%
  • AMGN up 2%

The biotech/pharma sector is moving higher. As we've stated before, these companies are very undervalued at the present time. Do your research and carefully consider the opportunities. Touc.

Nasdaq 100 Watch List

The following are the Nasdaq 100 members that are within 20% of the 52-week low:

  • Apollo Group, Inc. (APOL) at $57.10 within 3.16%
  • Cephalon, Inc. (CEPH) at $54.58 within 3.86%
  • Genzyme Corporation (GENZ) at $50.60 within 7.45%
  • Gilead Sciences, Inc. (GILD) at $42.55 within 8.08%
  • Biogen Idec Inc (BIIB) at $42.13 within 13.22%
  • Stericycle, Inc. (SRCL) at $52.37 within 18.06%
  • Amgen Inc. (AMGN) at $53.62 within 19.26%
  • Pharmaceutical Product Developm (PPDI) at $21.55 within 19.92%

The fact that all of these companies (except for APOL) are within the drug industry does not surprise me. The continued undervaluation of these companies makes them prime targets for acquisition by investors and larger drug companies. Touc.