I don't own it but a member in my club does and he mentioned the shellacking he's taken in a recent meeting. FWIW, Morningstar recently had them as a "pick" and I've included a snip below. I look forward to seeing your analysis.
On another note, is anyone finding anything to buy? Everything that seems attractive at first turns out to not pass my screens, mainly because of excess valuation. With the boom in homebuilding, I wonder if it's too late to take a position in Lowe's or Home Depot, or even one of the builders (BZH, DHI, CTX, RYL, all ranked "1" by Value Line and in the number 1 industry at the moment.)
- Kris
Pick: Elan, 5 stars
With Enronitis rampant in the market, shares of Elan have taken a
beating, but the punishment has gone too far, in our opinion. Issues
have been raised about how much revenue Elan derives from its many
joint venture/equity investments in the past few weeks, calling into
question its aggressive accounting practices. To size up the
potential damage, we ran a few negative scenarios through our model.
Using 65% of revenues as a base--the amount of actual pharmaceutical
product sales and contract revenue we could foot--we robbed the
company of 35% of its 2000 sales and grew it from there. We also
bumped up the costs as a percent of revenue and still came up with a
$20 fair value--well above its current price of $15. Elan is in
stable financial condition, even after considering its two off-
balance sheet special purpose entities, with more than $2.4 billion
in cash and investments. Its pipeline is very healthy and current
product growth is strong.
quicktake.morningstar.com |
