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Latest Valuentum Commentary
Dec 14, 2022
Moderna’s Personalized Cancer Vaccine (PCV) Could Be a Game-Changer When Combined with Merck’s KEYTRUDA
Image: Moderna’s therapeutics pipeline continues to advance, and the company recently received positive news regarding its personalized cancer vaccine (PCV), ID # mRNA-4157, when combined with Merck’s KEYTRUDA. Image Source: Moderna. Moderna and Merck have revealed what could be a big breakthrough with respect to investigational cancer treatment, but we remind investors that the news is a Phase 2b study, and there is still a meaningful probability that the Phase 3 trial for the immunotherapy may be unsuccessful. Still, the Phase 2b results for the PCV-KEYTRUDA combination showed an impressive 44% reduction in the risk of recurrence or death in patients with late-stage melanoma, and the adverse effects from the combined PCV-KEYTRUDA therapy occurred in just 14.4% of patients, which was not terribly different than those receiving KEYTRUDA alone. There are a plethora of players dabbling in mRNA vaccine technology these days, and we remain excited about its future potential to improve patient outcomes, as much as we are about CRISPR gene-editing technology.
Oct 10, 2022
Best Idea Vertex Pharma Outperforming in 2022
Image Shown: Shares of Vertex Pharmaceuticals Inc, an idea included in our Best Ideas Newsletter portfolio, have performed incredibly well year-to-date through October 2022. Vertex Pharma’s performance this year has been stellar, and its financial position is rock-solid. The company has ample financial firepower to invest heavily towards commercializing its existing drug development pipeline and is well-positioned to ride out the numerous exogenous shocks seen of late (inflationary pressures, geopolitical tensions, and the increasing likelihood of a global recession in the near term). We continue to like shares of VRTX in the simulated Best Ideas Newsletter portfolio.
Apr 7, 2022
Best Biotech Idea Vertex Pharma Outperforming Struggling Peers, Its New Treatment for Pain a Game Changer in the Fight Against the Opioid Epidemic
Image: Vertex Pharma has advanced more than 18% since the beginning of 2021, trouncing the performance of the SPDR S&P Biotech ETF by an incredible margin. The outperformance gap stands at more than 50+ percentage points at the time of this writing. We were blown away by the phase II results released March 31 at Vertex Pharma for its non-opioid, non-addictive pain killer, the NaV1.8 inhibitor VX-548, and we think the molecule has the potential to provide a solution to the widespread opioid crisis in a meaningful way. According to the U.S. Department of Health and Human Services, tens of thousands of deaths each year are “attributed to overdosing on synthetic opioids.” The company’s phase II results for VX-548 provide “proof of concept” in order to push the study to more advanced studies, and we are highly encouraged. We also note that the long-term revenue and earnings potential for VX-548 is not included in our valuation model for Vertex Pharma and would offer pure incremental upside to our fair value estimate. VX-548 could be a game-changer in the fight against the opioid epidemic, in our view.
Apr 1, 2022
Dividend Increases/Decreases for the Week April 1
Let's take a look at companies that raised/lowered their dividend this week.
May 18, 2021
German Industrial Conglomerate Siemens Remains an Attractive Income Generation Idea
Image Shown: Siemens AG sees the global industrial economy staging a recovery from the COVID-19 pandemic, which in turn supports the firm’s outlook. The company raised its full-year guidance when Siemens published its latest earnings report. Image Source: Siemens AG – Second Quarter of Fiscal 2021 IR Earnings Presentation. Siemens has identified a number of growth avenues and is leaning on its digital capabilities to bring various industrial processes into the 21st Century. Siemens generates strong free cash flow, has a promising growth outlook, and its ‘A-rated’ long-term credit rating is impressive. Shares of SIEGY have been on a nice upward climb during the past year, as investors continue to warm up to its promising growth story. There could be room for substantial upside as the global economy recovers from COVID-19, and investors get paid a nice ~2.5% dividend yield to have exposure to this global industrial powerhouse. We think Siemens could be an interesting income generation idea for consideration.
Apr 21, 2021
One of Our Favorite Dividend Growth Ideas J&J Smashes Consensus Estimates
Image Shown: Summary of Johnson & Johnson's first-quarter 2021 earnings results. Image Source: J&J. On April 20, Johnson & Johnson reported first quarter 2021 earnings that smashed past consensus estimates. In conjunction with the solid earnings report, Johnson & Johnson raised its quarterly dividend 5% sequentially to $1.06 per share or $4.24 per share on an annualized basis, good for a forward-looking yield of ~2.5% as of this writing. The health care giant’s outperformance largely came from its ‘Medical Devices’ segment, which took a beating last year as the COVID-19 pandemic prompted widespread deferrals of elective surgeries. Last quarter, this part of the firm’s business grew its reported sales by 10.9% year-over-year, aided by strong underlying demand as elective surgeries began to resume in earnest in key countries worldwide and to a lesser extent, foreign currency tailwinds (on a non-GAAP adjusted operational basis, sales at this segment were up 8.8% year-over-year). We continue to like J&J as an idea in both the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio.
Mar 10, 2021
Johnson & Johnson’s COVID-19 Vaccine Gets the Green Light
Image Shown: We include Johnson & Johnson as an idea in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. The health care giant is home to over two dozen ‘platforms/products’ that generate $1.0+ billion in annual sales, as you can see in the above graphic. Recently, Johnson & Johnson’s COVID-19 vaccine received emergency use authorization from the US CDC, which will provide public health authorities with another arrow in their quiver as it relates to bringing an end to the public health crisis. Image Source: Johnson & Johnson – Fourth Quarter of 2020 IR Earnings Presentation. At the end of February 2021, the US Centers for Disease Control and Prevention (‘CDC’) gave emergency use authorization for the single-shot vaccine developed by Janssen, a subsidiary of Johnson & Johnson, to inoculate patients aged 18 years and older from the coronavirus (‘COVID-19’). We have been covering this story for some time and are delighted to see that Johnson & Johnson’s COVID-19 vaccine crossed the finish line. Having another safe and viable COVID-19 vaccine at their disposal should go a long way in assisting global health authorities in eventually bringing the pandemic under control. We covered the interim safety and efficacy data from Johnson & Johnson’s Phase 3 COVID-19 vaccine clinical trial previously. Johnson & Johnson is included as an idea in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios, and we continue to like exposure to the name. The top end of our fair value estimate for JNJ sits at $172 per share, and we are big fans of its promising dividend growth trajectory. Shares of JNJ yield ~2.6% as of this writing.
Feb 21, 2021
Johnson & Johnson’s COVID-19 Vaccine Candidate Nears the Finish Line
Image Source: Johnson & Johnson – Fourth Quarter of Fiscal 2020 IR Earnings Presentation. We appreciate all the hard work Johnson & Johnson and its partners have put towards developing a safe and viable COVID-19 vaccine candidate. Johnson & Johnson issued favorable guidance for fiscal 2021 when it reported its latest earnings aided by expectations that its medical devices business will recover this fiscal year along with sustained strength in its core pharmaceutical sales according to management commentary given during the related earnings call. We continue to like exposure to Johnson & Johnson in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios.
Jan 15, 2021
Steris Ties the Knot with Cantel Medical
Image Shown: Cantel Medical Corp is getting bought out by Steris PLC through a cash-and-stock deal. The image up above highlights Cantel Medical’s promising long-term growth outlook, though its performance in 2020 was subdued due to headwinds created by the coronavirus (‘COVID-19’) pandemic. In our view, Steris was attracted to Cantel Medical’s improving outlook (the latter started to stage an impressive rebound in the second half of calendar year 2020) and the ability for the combined firm to generate substantial synergies. Image Source: Cantel Medical Corp – December 2020 IR Presentation. On January 12, Steris PLC announced it had reached an agreement with Cantel Medical to buy the company through a cash-and-stock deal worth ~$3.6 billion (~$4.6 billion when including the assumption of debt and convertible notes) that valued CMD at $84.66 per share based on the closing price of STE on January 11. The deal includes $16.93 in cash and 0.33787 share of STE for each share of CMD. Steris is heavily focused on sterilization products for hospitals and laboratories (it also provides related services). The company intends to fund the cash component of its deal for Cantel Medical with new debt issuance and committed bridge financing, which will also be used to refinance most of Cantel Medical’s existing debt. Shares of Cantel Medical have advanced ~38% (as of the end of normal trading hours January 13) from when we first wrote about the idea back in early December 2020. Even before the acquisition was announced, investors started to warm back up to the company due to expectations that the headwinds that held the firm back last year would start to dissipate this year. In our view, Steris’ acquisition of Cantel Medical is highly complementary. It appears Steris was optimistic that Cantel Medical’s long-term growth outlook remained bright even though the firm had a rough 2020.
Nov 11, 2020
Pfizer/BioNTech Vaccine Not a Catalyst for Portfolio Changes
Image: BioNTech. Next Generation Immunotherapy Presentation, October 2020. The world received great news this week that the days of this terrible COVID-19 pandemic may finally be numbered. On November 9, Pfizer and BioNTech announced that “their mRNA-based vaccine candidate, BNT162b2, against SARS-CoV-2 has demonstrated evidence of efficacy against COVID-19 in participants without prior evidence of SARS-CoV-2 infection.” Our thesis on the inevitable successful development of a vaccine for COVID-19 never centered on which pharma/biotech giant would be the first to develop one, but rather our thesis has always been focused on the large number of shots on goal (the large number of vaccine candidates in development, and the high probability that at least one would be effective). We’re sticking with some of the best companies out there in the newsletter portfolios, however, and we’re reiterating our fair value estimate range of 3,530-3,920 on the S&P 500 (established June 12), which we derive as 18-20x multiple on pre-pandemic 2021 earnings of $196. The S&P 500 stands within the range at ~3,560 today.
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