Alkermes (NASDAQ: ALKS) is
a biotechnology company that makes extended-release products for the treatment of chronic diseases. The firm developed and manufactures Vivitrol, a treatment for alcohol dependence that partner Cephalon (NASDAQ: CEPH) markets in the United States. It also makes Risperdal Consta, a long-acting version of Janssen's schizophrenia medication Risperdal. Alkermes' pipeline includes extended-release injectable, pulmonary and oral products for the treatment of central nervous system disorders, addiction and diabetes. Bristol-Myers Squibb (NYSE: BMY) and Johnson & Johnson (NYSE: JNJ) are competitors.
The firm pleased investors earlier in the week, when it expanded its stock repurchase program by $40 million. Management also guided FY09 EPS to 11-16 cents and FY09 revenues to $200-$225 million. Analysts had been looking for a 10 cent per share loss and $194.89 million. Fiscal year cash flow from operations was expected to total $25-$30 million, as compared to an original $1-$5 million estimate.
The stock popped
on the news and then moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with four "strong buys", four "buys", six "holds" and one "underperform". Analysts see a 48% average annual growth rate, through the next five years. The ALKS P/E ratio (7.89), Price to Cash Flow ratio (6.72), Return on Assets (27.26%), Return on Investment (29.80%), Return on Equity (65.64%) and Net Income per Employee ($273.74k) compare favorably with industry, sector and S&P 500 averages. Over the past twelve months, the stock has traded between $10.32 and $18.78. A stop-loss of $11.15 looks good here. Note that the firm is next expected to report quarterly results in late July.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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Reader Comments (Page 1 of 1)
6-18-2008 @ 11:48PM
Shaun said...
Looks like a nice set up for a short term trade to me. Maybe a target of $14, not much but still nice.
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