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Biotech / Medical : Biotech Short Candidates
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To: tuck who wrote (7)1/9/2001 11:49:02 PM
From: prophet_often  Read Replies (2) of 897
 
IVGN rode the genomics wave last year, but I consider it a research products manufacturer. From the company profile:

Business Summary
Invitrogen Corporation develops, manufactures, and markets research tools in kit form and provides other research products and services to corporate, academic and government entities.

They make "kits" for genomic research. So what? This is a low margin business. The profile lists their profit margin at 0.6% and their operating marging at 1.8%. Am I missing something here? Invitrogen sells research products to genomics companies yet lets look at their valuation:

Using NEXT years analyst estimates of 1.31/sh, IVGN is trading at a forward P/E of 47. Why is this company trading at or above valuations placed on top-tier biotechs? For a low-margin research products business? I agree that this company has value but not at this price.

Meanwhile, the chart has rolled over:

siliconinvestor.com

I traded it for the first time yesterday for a 4 point daytrade short and just watched it today as it followed through on a weak bounce off support late yesterday at 56 to close at 61. I am looking to re-enter my short on this bounce. I would really like to see close to 70 again to re-enter for maximum safety and would play it for a longer term short.

That is the first of my biotech short candidates. Having worked in the biotech industry for 16 years and having used Invitrogen's products, I really think the valuation is out of whack here. What do you think? Hope I can contribute a few more here in the future.
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