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Jone's Medical (let's try this again) basically doubled in price over the last two months. It split 3 for 2 on March 1, and raised it's quarterly dividend to boot. They make critical care pharmaceuticals (45% of revenues) and nutritional supplements & vitamins (55%). Their flagship product is Thrombinar, which is a topical hemostat used to arrest bleeding by surgeons. They announced their earnings on Feb 6: 4th Q/Dec 1995 earnings were up $.29 vs $.14 for same period last year, and annual earnings were $.96 vs $.60 the previous year. Robertson Stephanson initiated coverage of them with a buy recommendation about two months ago I believe, which propelled the stock up 3 1/8 to 26 5/8. Analyst noted the last 4 drug products acquired by the company all grew in revenue by 45%. At this point however I consider JMED, even having fallen $4, as too expensive at this point. It has a PE of 44 last I looked. A primitive measurement I used to evaluate this company is - their historic earnings growth rate over 5 years has been 22%, and applied this to the 55% portion of the company. If the other 45% of the company, the critical care drugs, are growing at 45% then the overall company should be valued at about 30 PE. (20% +40%/divided by 2). So I wouldn't pay more than 30 times earnings for them, and a little less for a safety margin. They have 260 employees, and 9.4 million shares outstanding. I had my buy order in on the same day the analyst came out with his buy recommendation - which was pure coincidence. The stock shot up, and then went up so fast, and the pullbacks were so brief, that I wasn't able to buy in on the cheap. Hope this helps. |
