AbbVie
Just like we spoke about in early December, AbbVie (ABBV) is starting to feel an acquisition spree it was on last year.
And just as we said, long-dated put options back then would’ve yielded well now that the company lowered its guidance this morning due to the “dilutive impact” of its closure of the acquisition of ImmunoGen.
Duh. $10.1 billion isn’t pocket change. And we still have no idea whether ImmunoGen’s product lines helps AbbVie expand their business.
I would steer clear of the company and refrain from believing in the long-term potential of these acquisitions right now.
Sure, they could work out. But there’ll be a lot more money in situations which we’re more certain about.
Viking Therapeutics
The $3 billion biotech jumped 17% this past Thursday after saying that it expects data from early trials of its weight-loss drug by the end of March.
Should you buy? Is this a cheaper way to get into the weight-loss bonanza? No.
GLP-1 receptor agonists (Ozempic and Wegovy) are obviously gaining a lot of traction right now. Ozempic-maker Novo Nordisk (NVO) is up 25% since December.
But just because a company is in a trend doesn’t mean it’s a good buy. It reminds me of when companies would put “blockchain” in their company name a few years ago and soar 50% overnight.
What you should be asking is if Viking (VKTX) will be able to make its weight-loss drug cheaper than a company 180 times bigger than it? It probably can’t.
But will its weight-loss drug be more effective? Also probably not.
I’d avoid and stick with the bigger players in this niche right now.
Cloudflare
The cybersecurity giant knocked earnings out of the park on Friday and won high praise from most of Wall Street (the stock jumped 22% in a day).
Analysts are questioning valuation now. Only 38% of them are bullish because of that. What I find odd is that a whole slew of them maintained neutral ratings and raised price targets.
What happens when Cloudflare (NET) hits record earnings next quarter due to the rising number of AI use cases, yet Wall Street maintains neutral ratings and raises targets again?
What this tells me is that valuation methods are anything but certain. I like Cloudflare, even if Wall Street is nervous.
By submitting your email address, you will receive a free subscription to Money Morning and occasional special offers from us and our affiliates. You can unsubscribe at any time and we encourage you to read more about our Privacy Policy.
