Magazine

Inside Wall Street


Why Bristol Looks Like Buyout Bait

At Bristol-Myers Squibb (BMY), sales and earnings are in high gear. To some analysts, that makes it a more attractive takeover target. Buyout rumors have swirled in the past, but recently Bristol has been busy selling unprofitable assets and slashing costs. With its shares at 21.20, down from 32 in mid-July, "the company is an attractive takeover candidate for a larger pharma such as Pfizer (PFE) or France's Sanofi-Aventis (SNY), both of which have been partners with Bristol on some of its products," says Brian Marckx of Zacks Investment Research. He upgraded his rating to buy from hold, based on Bristol's crimped price and healthy earnings—which, he says, have grown as fast as the larger pharmas. Its blockbuster drug Plavix, used to prevent platelet aggregation and help clear arteries, is helping drive earnings growth to nearly 20% in 2008, says Marckx. Indications are that Plavix may also help reduce the risk of a heart attack or stroke in patients with atherosclerosis. Sanofi is a partner in promoting the drug. The Plavix patent expires in November, 2011, so Bristol is busy ramping up its pipeline of attractive new products in the mid-to-late stage of development. One is Apixaban, an oral drug used to combat blood clotting, in which Pfizer is a partner and will fund 60% of development costs. Herman Saftlas of Standard & Poor's (MHP) believes Bristol "could offer significant value in a merger with the right partner."

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Don't Be Leery of Lehman

What now, Lehman? Just before the Fed and JPMorgan Chase (JPM) bailed out Bear Stearns (BSC) on Mar. 17, the Street feared Lehman Brothers (LEH) was next to go under. So it crashed to 31 a share on Mar. 17, down from 42.62 two days before. But it quickly recovered, to 46, on Mar. 18 when the rescue was reported. Most shell-shocked investors are still leery, but some pros believe Lehman, which hit 82 in June, is a buy. "The fears surrounding the firm's funding and liquidity position have been overstated," says William Tanona of Goldman Sachs (GS) (which has done business with Lehman). His 12-month target: 58. So it still offers "an attractive entry point," he says. Richard Bove of Punk Ziegel also rates Lehman a buy. "Lehman's management, led by Richard Fuld, is the best in the business," says Bove.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Repros' Promising Drug Pipeline

Little- known Repros Therapeutics (RPRX) is expected to team up with a big drugmaker to help develop its lead product, Proellex, now in Phase III clinical trials, to treat uterine fibroids and related anemia—a $3 billion market. Each year "some 300,000 women in the U.S. undergo hysterectomy as a result of uterine fibroids," notes Mark Lappe, managing partner at Efficacy Capital, which owns shares. Repros is also developing Androxal, now in Phase II trials, to restore pituitary response in men with low testosterone levels, and for obese people with high blood pressure and diabetes. Lappe says 13 million men in the U.S. have testosterone deficiency. Oppenheimer (OPY) analyst Dr. Brian Abrahams rates Repros, now at 9.64, outperform with a 12-month target of 19. "Proellex could fill an unmet need in treating fibroids," he says.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus