Advertisement
Markets

MedImmune: Pills and Hills

Favorable comments about this early-generation biotechnology stock helped send its price up more than 4% yesterday. But can it ever be more than a trading vehicle?

Since 2000, the chart of MedImmune has had more peaks and troughs than a cyclical steel or machinery stock. MedImmune shares have been true to form this year, with plenty of ups and downs. But after taking over full control of its best-selling drug, Synagis, on July 1, MedImmune has won over a number of Wall Street analysts who think that the Gaithersburg, Md., biotech concern has finally gotten its act together. Some now think that MedImmune's stock (symbol MEDI) is worth about 30% more than the current share price of $27.

Advertisement - Article continues below

One such booster is Mark Schoenebaum of Bear Stearns, who wrote Tuesday that the Synagis "franchise" is worth $20 a share alone and that his target for the stock is $35. MedImmune has both a lot of cash and a lot of debt, but, like many speculative drug companies, it's tough to evaluate the shares on current earnings or other basic financial measurements.

The key unknown is what will happen with MedImmune's pipeline of new products. The company is probably best known for FluMist, a drug that sounds wonderful because you spray it into your nose. For most folks, that beats the alternative: a flu shot. But FluMist has never been a blockbuster seller. Synagis, which treats respiratory viruses in babies and young children, has been more successful, though Synagis sales slowed this summer after insurance companies apparently resisted a sharp price increase. That forced doctors and patients to look at alternatives while MedImmune reviews its marketing. The company is researching a new version of its nasal flu drug that would be more stable than FluMist (a problem with FluMist is limited shelf life, which means that unused product must be discarded quickly).

Advertisement
Advertisement - Article continues below

All this leaves as many questions as answers, but you know you're getting into murky territory whenever you invest in a drug company with so much riding on ideas in development. With more than $6 a share of cash on its balance sheet, however, MedImmune has the resources to conduct significant research for a long time. It has about a half-dozen ideas in some stage of research or clinical trials.

Because of its history of tantalizing then disappointing investors, MedImmune has plenty of skeptics. But even two rather unenthusiastic reports issued recently, by analysts at Thomas Weisel Partners and at Friedman Billings Ramsey, grant that the stock deserves no worse than to sell in the high $20s. If MedImmune nails the flu thing -- even if it takes several years -- that cyclical trading pattern might morph into something more deserving of a growth stock.

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
Tax Changes and Key Amounts for the 2020 Tax Year
tax law

Tax Changes and Key Amounts for the 2020 Tax Year

Americans are facing a long list of tax changes for the 2020 tax year...and it's never too early to start thinking about next year's return.
June 22, 2020
10 Tax Breaks for the Middle Class
tax deductions

10 Tax Breaks for the Middle Class

Tax breaks aren't just for the rich. There are plenty of them that are only available to middle- and low-income Americans.
June 30, 2020

Recommended

Closing Bell 7/7/20: Nasdaq's 5-Day Win Streak Snapped
Markets

Closing Bell 7/7/20: Nasdaq's 5-Day Win Streak Snapped

A broad-market downturn Tuesday ended the Nasdaq's five-day win streak and sent economically sensitive industries to deep losses.
July 7, 2020
The Bull Run Is Over: It’s Time To Replace Luck with a Plan
investing

The Bull Run Is Over: It’s Time To Replace Luck with a Plan

It’s not hard for investors to look good during a bull market, but now comes the real test.
July 7, 2020
Closing Bell 7/6/20: U.S. Stocks Grab the Baton From China
Markets

Closing Bell 7/6/20: U.S. Stocks Grab the Baton From China

A surge in Chinese equities, as well as a massive improvement in services-sector data, lifted U.S. stocks and sent the Nasdaq to new highs Monday.
July 6, 2020
When Online Investing Turns Deadly: Lessons from a Robinhood Trader’s Suicide
investing

When Online Investing Turns Deadly: Lessons from a Robinhood Trader’s Suicide

Gamification of financial apps can make investing fun, but unsophisticated investors can get in over their heads if they aren’t careful.
July 6, 2020