It is biotech stocks like Cubist Pharmaceuticals (Nasdaq:CBST) that keep investors coming back into a sector that is arguably more famous for spectacular failures than reliable success. While Cubist stock has not reclaimed the highs of the 2000-2001 era, the company has nevertheless ridden the success of its antibiotic Cubicin to become a near 10-bagger from the lows of late 2002. The question for investors now, though, is whether the company can find another Cubicin and keep the investor enthusiasm healthy.
A Solid, But Not Special, Second Quarter
Cubist reported sales growth of 5% for the second quarter, fueled by 9% growth from the company's core drug, Cubicin. Although Cubicin sales were a bit stronger than analysts were generally expecting, overall revenue was basically in line with expectations. Margin performance was likewise unspectacular in either direction - the company saw some gross margin erosion (due in part to larger sales discounts), but adjusted operating income growth tracked revenue.
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