I would argue that the reaction to H. Lundbeck’s (OTCPK:HLUYY) (LUN.CO)
second quarter earnings highlights just how big of a role momentum and
expectations, reasonable or otherwise, play in stock valuations.
Lundbeck’s quarter wasn’t pristine, but it was a beat-and-raise quarter,
but it wasn’t on pace with the recent beat-and-raise trend and it’s
clear that the strong cost-cutting tailwinds that pushed Lundbeck along
so strongly are now going to crash into the realities of serious
patent/generic revenue drop-offs.
I probably got a
little greedy holding on to Lundbeck, but I was pretty much playing with
house money and I don’t really have too many regrets. I believe
Lundbeck is on a good trajectory, and the company has added multiple
compounds to its pipeline recently, but it is likely going to take some
meaningful good news from the clinic to get excitement going again in
these shares, as I think the party is over for the run of beat-and-raise
quarters fueled by the prior administration’s cost cuts.
Read more here:
After A Wild Party, Lundbeck Wakes To A Nasty Hangover
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