AxoGen Still In The Doghouse, But The Opportunity Is Compelling

The going hasn’t gotten any easier for AxoGen (AXGN). This up-and-coming med-tech company specializing in nerve repair has spooked growth investors with regard to its revenue growth rate and investors have also grown more concerned over the possibility of more intense competition from companies like Integra (IART) and Baxter (BAX) in the nerve repair market. While all that’s been going on, there seems to have been a general shift away from higher-growth (and higher-risk) stories in the med-tech space.

I’m still bullish on AxoGen, as I believe it addresses a large and under-served market with better products, but sentiment won’t turn around overnight. The 30%-plus long-term revenue growth I expect from AxoGen is hardly conservative, but I do believe these shares can outperform as surgeons become more familiar and comfortable with the procedure/products and increase their orders in the coming years.

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AxoGen Still In The Doghouse, But The Opportunity Is Compelling

AxoGen Offers An Exciting Story At Nosebleed Prices

When the stocks of real companies go up more than 250% in a year, it’s a safe bet that there are at least two factors in play – the company has a great growth story and institutions have caught wind of it. And so it would seem with AxoGen (AXGN), where the company’s products for peripheral nerve repair are legitimately exciting, but where the growth expectations are already quite robust.

AxoGen shares seem to be pricing in a scenario where the company holds close to one-third of its addressable market in 2027 with FCF margins in the mid-20%s. That’s achievable, but it doesn’t leave much room for stumbles or disappointments. I can’t make a value case for AxoGen, but I know there are investors who care more about story and growth, and maybe there’s still some appeal here for that group.

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AxoGen Offers An Exciting Story At Nosebleed Prices

Seeking Alpha: Nektar Therapeutics Going Into The Decline With A Better Profile

I have no idea how long this downturn in the biotech sector will last, but Nektar Therapeutics (NASDAQ:NKTR) has survived its share in the 20-plus years of the company's existence. I also believe that the company is going into this downturn in the best shape it has been - Nektar can look forward to meaningful royalty streams from two drugs with $1 billion-plus potential, and the company has a more credible and focused pipeline.

My model suggests that the shares should be worth over $18 today, with royalties from approved drugs (AstraZeneca (NYSE:AZN)/Movantik and Baxter's (NYSE:BAX) Adynovate) making up about $9 of the valuation. Nektar's pipeline remains high-risk, but the potential of abuse-resistant painkillers and differentiated immuno-oncology drugs is meaningful, and the company seems to be making better decisions with regard to its R&D capital allocation.

It's certainly important to note that this is an ugly stretch in the biotech space and it could get worse (if not much worse) before getting better. My valuation is predicated in part on what the market has been willing to pay for approved drugs in the past, and the market can certainly undershoot those multiples during pullbacks.

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Nektar Therapeutics Going Into The Decline With A Better Profile

Seeking Alpha: Structurally Light On Growth, Baxter Has A Lot Of Work Ahead

In healthcare, as in most segments of the market, growth fixes or at least papers over a lot of problems. Nobody really cares if the latest hot tech company is producing lousy margins and has no clear path to meaningful free cash flow - as long as the revenue growth is eye-popping, that's good enough for a high multiple until the day of reckoning comes into view.

For Baxter (NYSE:BAX), the split/spin-off of Baxalta (NYSE:BXLT) leaves behind a company with solid market share in stable markets, but management is going to have to roll up their sleeves and put in some work to find growth opportunities and drive better margins. There is certainly room for Baxter to do better in infusion pumps and renal care, and biosurgery can be a decent business in the coming years, but the market is already expecting a lot of improvements here in the years to come.

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Structurally Light On Growth, Baxter Has A Lot Of Work Ahead

Seeking Alpha: With Nektar Therapeutics, Value Never Comes Easy

Ordinarily you might think that the approval of one billion-dollar drug and the imminent approval of another would be good news for a biotech, but then Nektar Therapeutics (NASDAQ:NKTR) has never been an ordinary biotech. Investors remain rightly concerned about the odds of commercial success with the company's OIC drug Movantik and somewhat less rightly concerned about the prospects of Baxter's (NYSE:BAX) upcoming long-acting PEGylated rFVIII product, and the negative results from the Phase III BEACON study of NKTR-102 surely didn't help.

I've never been a particular fan of Nektar, so it serves me right that the shares would fall about 15% since I last wrote favorably about them. Even despite these concerns and the elevated level of risk, I continue to believe that Nektar shares look undervalued today.

The full article is here at Seeking Alpha:
With Nektar Therapeutics, Value Never Comes Easy

Seeking Alpha: Nektar Therapeutics Has More To Give

This year has seen biotechs on a rockier road, but those companies that have continued to develop broad pipelines have fared a little better. Nektar Therapeutics (NASDAQ:NKTR) belongs on that list, as the company continues to move forward with an array of late-stage assets and a deep pipeline based upon its PEGylation technology (a technology that alters pre-existing drugs to improve efficacy, tolerability, and so on). Not only does Nektar still look undervalued, I believe that the assumptions underlining that valuation are still conservative enough that de-risking events (namely clinical trial results) can add meaningful value.

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Nektar Therapeutics Has More To Give

Seeking Alpha: CareFusion's Strong Share Isn't Quite Enough

CareFusion (NYSE:CFN) is an interesting company in several respects. A leader in important markets like drug dispensing, infusion, and respiratory care, the company's margins and returns on capital are nevertheless not really "leader-like". What's more, there are some reasonable concerns as to whether the company's business is skewed too heavily towards capital equipment to facilitate good long-term growth. I come down basically in the middle - I like CareFusion's business well enough, but the weak ROICs and explicit intentions to be active in the M&A market lead me to demand a bigger discount to fair value before buying with my own money.

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CareFusion's Strong Share Isn't Quite Enough

The Motley Fool: Why the Market is Wrong About Baxter Stock

Diversified health care player Baxter (NYSE: BAX  ) has done alright so far this year, up almost 10% and ahead of the S&P 500, but there is still a fair bit of skepticism on the name. Analysts continue to fret that Biogen Idec (NASDAQ: BIIB  ) will grab considerable market share in hemophilia and that generic competition for other products will add to the revenue erosion. Although this is a challenging period for the company ahead of data on is own long-acting hemophilia product, approval of HyQ, and real leverage in the renal business, Baxter shares continue to look a little undervalued for patient long-term investors.

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Why the Market is Wrong About Baxter Stock

The Motley Fool: Is Biogen Idec Inc a Buy?

This year has turned against biotech investors, as the long-awaited correction came on hard in March and April. While conditions seem to have stabilized for the time being, Biogen Idec (NASDAQ: BIIB  ) remains an outperformer as investors have slower to dump shares of more established biotechs with strong launch and pipeline stories like Biogen, Gilead, and Regeneron. Biogen's pipeline is has higher risk than many of its peers, but the rewards if SMNrx, STX-100, or the anti-LINGO antibody BIIB 033 work out will be considerable and Biogen has lower risk drivers like the ongoing Tecfidera launch and rollout of new hemophilia compounds to keep investors engaged.

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Is Biogen Idec Inc a Buy?

The Motley Fool: Can Fresenius Medical Care AG & Co. Get Past Medicare Reimbursement Issues?

When Medicare plays a major role in a company's business model there always seem to be challenges. Such is the case for Fresenius Medical Care (NYSE: FMS  ) . While the company's strong global share in dialysis equipment and strong share in North American dialysis services ought to be a strong positive in the company's favor, the difficult reimbursement environment has created challenges and uncertainties in the company's model. Though there is a significant global growth in the number of patients with end-stage renal disease, Fresenius Medical Care can't afford to drop the ball when it comes to careful expense management.

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Can Fresenius Medical Care AG & Co. Get Past Medicare Reimbursement Issues?

The Motley Fool: Will Baxter International Inc's Split Unlock Shareholder Value?

If a strategy has worked before, try it again. Baxter (NYSE: BAX  ) has never been shy about identifying businesses that lie outside its core operating focus and being willing to set them free. Edwards Lifesciences, Caremark, and Allegiance Healthcare (now part of Cardinal Health) were all once under the Baxter umbrella, and arguably did better on their own than they would have as parts of Baxter.

Now the company is doing it again, choosing to spin off its biopharmaceuticals business as an independent publicly traded company. Investors cheered the move, as it does remove some issues that were clouding the value of the company's other operations.

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Will Baxter International Inc's Split Unlock Shareholder Value?

The Motley Fool: Is This Overlooked Stock Primed for More Growth?

Blood products really don't get that much attention in the health care space, but it's a market worth more than $10 billion a year excluding hemophilia products and growing around 6% to 8% a year as indications and patient identification expand. Baxter (NYSE: BAX  ) , one of the largest players in the market, is reasonably well-known to investors, but Grifols (NASDAQ: GRFS  ) is more obscure despite being one of the three largest players in the world and the largest in the U.S. As Grifols looks to leverage good underlying market growth through more efficient operations, the growth potential looks impressive.

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Is This Overlooked Stock Primed for More Growth?

The Motley Fool: Even With Growth Opportunities Ahead, Is Hospira Overvalued?

Leading specialty injectables and infusion pump manufacturer Hospira (NYSE: HSP  ) has suffered greatly from largely self-inflicted wounds over the past couple of years. A lackadaisical approach to proper plant management has led to numerous FDA warning letters at key plants and a shipment freeze on the company's pumps. Yet, Hospira remains the largest player in an industry that has attractive gross margins, significant barriers to entry, and frequent supply shortages.

Hospira seems to be on the road back, and seems to be taking seriously both the need to comply with the FDA regulations and the need to augment its long-term growth potential. The problem is that it looks like Wall Street is already many steps down that road in terms of rewarding the company with a robust valuation.

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Even With Growth Opportunities Ahead, Is Hospira Overvalued?

The Motley Fool: Biogen Idec Inc's Fortress Is Pricey Real Estate

Outside of orphan drugs it is difficult for drug companies to establish wide moats and essentially dominant a therapeutic area, but Biogen Idec (NASDAQ: BIIB  ) is well on its way to doing just that in multiple sclerosis. Not unlike Gilead in anti-viral therapies (particularly hepatitis C) and Novo Nordisk in diabetes, that strong market share has translated into healthy cash flow and robust premiums for Biogen's shares.

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Biogen Idec Inc's Fortress Is Pricey Real Estate

The Motley Fool: Baxter International, Inc. Will Be Nit-Picked, but The Quality Is There

Wall Street can be surprisingly stubborn at times. Right now, for instance, it appears that there's a deep commitment to like Abbott Labs as a recovery play in 2014, but an equal commitment to dump on Baxter (NYSE: BAX  ) and predict significant market share loss to Biogen Idec (NASDAQ: BIIB  ) in hemophilia coupled with other imagined disappointments.

To be sure, Baxter is not my favorite stock today, and the company did not provide a perfectly clean fourth quarter on Thursday morning. What Baxter did offer, however, was good enough; I think investors who can be patient with a pretty understated company can do well over the long term with Baxter.

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Baxter International, Inc. Will Be Nit-Picked, but The Quality Is There

The Motley Fool: Alnylam Offers an Exciting Rare Disease Pipeline, but Expectations Are High

"Biotechs are risky" is a standard boilerplate warning when writing about the sector, but some situations are riskier than others. In the case of Alnylam Pharmaceuticals (NASDAQ: ALNY  ) , the sell-side seems so eager to make a bullish case that uncommonly high approval odds are already being applied to the company's early stage pipeline.

There is also still the prospect of competition from Isis Pharmaceuticals (NASDAQ: ISIS  ) and its partner GlaxoSmithKline (NYSE: GSK  ) , as well as other large players like Sanofi (NYSE: SNY  ) , Novo Nordisk (NYSE: NVO  ) , and Baxter (NYSE: BAX  ) . Against that is the possibility that Alnylam is following a path that could closely resemble that of other rare disease biotechs like Genzyme, Alexion (NASDAQ: ALXN  ) , or BioMarin (NASDAQ: BMRN  ) .

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Alnylam Offers an Exciting Rare Disease Pipeline, but Expectations Are High

The Motley Fool: CareFusion Corporation: A Mid-Cap Med-Tech Leader

A lot of attention has historically been paid to CareFusion Corporation (NYSE: CFN  ) in the context of its place in the infusion pump oligopoly with Baxter (NYSE: BAX  ) and Hospira (NYSE: HSP  ) . There is a lot more to this story, though, as the company is a leader in medication dispensing, pre-op skin prep, and respiratory care. The acquisition of Vital Signs from General Electric will add scale in respiratory care and anesthesia, but leaves the company with enough dry powder to continue making additive deals. CareFusion is not a slam-dunk bargain, and there aren't many of those left in med-tech, but it is a name worth consideration today or at least a spot on investor watchlists.

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CareFusion Corporation: A Mid-Cap Med-Tech Leader

Seeking Alpha: 2014 Looking Like A Big Year For Nektar

Long-term investors in Nektar Therapeutic (NKTR) have had a roller coaster ride over the years, as these shares have traded up and down on for particular products like inhaled insulin and Nektar's PEGylation licensing royalty streams in general. Over the last few years, though, the company has been focusing on not only increasing its share of value in its partnered programs, but using the cash generated by them to support its own proprietary development portfolio.

The next year is looking like a big one for the company, as it should have considerably more clarity about the future of its opioid-induced constipation drug and its metastatic breast cancer drug. Together these drugs encompass about half of the value I see in the shares. While Nektar must deal with the same risks and uncertainties as any biotech, I think the Street may be underpricing these shares. Even with what I think are relatively conservatives estimates for many of the lead programs, I think the shares may be almost 30% undervalued and Nektar does offer a deep pipeline of potential drug candidates.

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2014 Looking Like A Big Year For Nektar

The Motley Fool: Baxter International - The Street Is Too Negative On A Proven Champ

Even though it is a large med-tech company with a market cap over $37 billion, Baxter International (NYSE: BAX  ) just doesn't seem to garner all that much investor interest, or at least not as much as peers/rivals like Biogen Idec (NASDAQ: BIIB  ) , Novo Nordisk (NYSE: NVO  ) , CareFusion (NYSE: CFN  ) , and Hospira (NYSE: HSP  ) . Institutions pay attention, though, and investors may be in a good position to benefit from their skepticism. While the Street is wrapped up in trying to guess just how much business Baxter will lose in its hemophilia and specialty pharmaceuticals businesses to competition, it looks as though the market may be missing the forest for the trees.

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http://www.fool.com/investing/general/2013/12/26/baxter-international-the-street-is-too-negative-on.aspx

MassDevice: CareFusion May Be Weighing Two Very Different Deals

At the risk of sounding a bit mean, CareFusion (NYSE:CFN) doesn't get all that much attention in the market. The company has a solid business between its operations in pharmaceutical dispensing, infusion, respiratory care, and procedural disposables, but it never really seems to get much attention unless/until there's another round of news about infusion pumps – a business where rivals like Baxter (NYSE:BAX) and Hospira (NYSE:HSP) have seen recalls that benefited CareFusion.

That has changed very recently, though, as CareFusion seems to be a key potential acquirer for at least two medical device businesses known to be on the block – ICU Medical (NSDQ:ICUI) and Smiths Group's (LON:SMIN) Smith Medical. CareFusion has long been an active acquirer and recently not only reaffirmed its commitment to future deals, but a willingness to do larger deals than before. While both ICU Medical and Smiths Medical make solid sense for CareFusion, both deals have certain drawbacks as well.

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