Elan Corp. always has the mind on its mind

Posted Feb 8th 2008 11:12AM by Joseph Lazzaro
Filed under: Stocks to Buy

The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is Elan Corp. Note: Elan is appropriate only for investors who can tolerate high-risk.

Elan Corp. (NYSE: ELN) is a neuroscience-based technology company focused on discovering, developing, manufacturing and marketing advanced therapies in neurology, autoimmune diseases and severe pain.

Analysts sees 33-40% revenue growth for Elan in 2008 after likely 30-35% growth in 2007.

Analysts also like Elan's ramping sales for drug Tysabri for multiple sclerosis and Crohn's disease; they are also hopeful about the company's Alzheimer drug, bapineuzmab, currently in trials.

Meanwhile, margins will remain strong in 2008, but may narrow somewhat from 2007's 56%. The Reuters F2007/F2008 EPS consensus estimates for ELN are -$0.67 / -$0.28.

The risks? Reduced demand or renewed safety concerns for Tysabri would (obviously) hurt ELN's results.

The First Call mean rating for ELN is: Hold. [22 firms.] Mean 2008 target: $22.00. [high: $31, low: $12.]

Stock Analysis: Elan is a high-risk stock not suitable for moderate-risk or low-risk investors. Investors with an investment horizon longer than three years should be rewarded from ELN's shares. Sell / Stop Loss if you were to purchase shares in this company: $16.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: autoimmune diseases, biotech, Elan Corp., ELN, health care, neurology, pharmaceuticals