bcrafty, see this from briefing.com ?
15:04 ET ******
Taro Pharmaceuticals (TARO) 89.59 +5.09: Briefing.com has been positive on TARO since April when the shares were priced around 46. Today, TARO finds itself among the few issues making new 52-week highs even with the major averages posting significant intraday losses. Since we highlighted it, the shares have generated an impressive 95% return on the back of its compelling fundamental valuation and attractive pipeline. The company recently declared a 2-for-1 stock split which will increase its total outstanding shares to about 22 million from 11 million. Post split, the float on TARO will still be a relatively light 14 million shares. TARO's bread and butter is making generic drugs. In other words, TARO isn't involved in the costly R&D associated with original drug development, they operate in the lower risk field of imitating existing products. TARO is currently the leading supplier of topical dermatological drugs in the North American generic pharmaceutical market. It also designs generic equivalents to DuPont's Coumadin, an anti-blood clotting agent used to prevent strokes, and Novartis' Tegretol which reduces the frequency and severity of epileptic seizures. The company still has five new generic drugs under review by the FDA and its first New Drug Application has been accepted as well. Industry sources estimate these drugs target an aggregate annual market of approximately $700 million -- and that's just here in the States. With a current market cap of under $1 billion, it looks as if TARO continues to be well positioned for growth going forward. Fundamentally, TARO trades at 36.5x next year's earnings estimates which we believe is reasonable given the company's forward prospects. Historically, the shares have traded in a very wide valuation range within a five-year high P/E multiple of 90x and a five-year low multiple of 9x. It's worth noting however, the low P/E multiple occurred last year and was partly a consequence of the company's rapid acceleration in earnings. Put another way, the "E" in the P/E got out ahead of the price ("P" in P/E) which is a dynamic that hasn't been seen very frequently in this market. As a consequence, we continue to see TARO as an attractive long-term investment opportunity in spite of its recent incredible advance. -- Michael Ashbaugh, Briefing.com |
