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Long Ideas

Wed
06
Nov

Edwards Seems Heartbroken

Edwards logo

Stock Tickers

EW ABT STJ ISRG

Given my recent love affair with medical device companies, I was recently asked for my opinion on, I was recently asked for my opinion on Edwards Lifesciences (EW), which has seen its stock plummet close to 10% since the company reported third-quarter earnings results that -- by the way -- beat Street estimates.

Since the stock peaked in October 2012 at around $109, shares have been on a steady decline,  losing close to 40%.

While I do believe these shares are fairly valued following this pullback, the question is how much of the recent decline was an overreaction to the company's guidance? Or are there real fundamental challenges investors would just rather not deal with?

Before we dive into Edwards' numbers, it's worth noting Edwards was at one point an obscure entrant in areas like tissue heart valves and critical care monitoring.

Tue
05
Nov

Abbott Still Has Work to Do

Stock Tickers

ABT

While Abbott (ABT) did show modest improvements in areas like diagnostics, which grew 8% on a reported basis, I remained stunned at what's become an "unhealthy" situation in the company's Established Pharmaceuticals business, the "branded generics" department I mentioned above.

As noted, ahead of the report, I cited better-than-2% growth as cause for optimism. But Abbott went in the other direction. Instead, the Pharma business declined 3% year over year (reported).

Even more discouraging was that Abbott's Nutrition business, the company's largest segment, grew just 2%. It's true that the unfavorable foreign tax rate of 2.3% took a toll on the revenue performance. But even in local currency, nutrition revenue grew less than 1%, which paled in comparison to the 6% growth posted in the July quarter.

Mon
04
Nov

The Worst is Over for Glaxo

Glaxo logo

Stock Tickers

GSK RHHBY NVS SNY

Shares of GlaxoSmithKline (GSK) have gone nowhere in six months. As disappointing as that may be for current shareholders, I believe it's been a victory for a company, which has been flooded in a wave of negative news involving (among others) a bribery scandal in China.

Although the details are still being sorted out, it was reported in July that Glaxo was alleged to have secretly funneled close to 3 billion yuan, or what amounts to almost $500 million in U.S. dollars to travel agencies so that they can distribute to Chinese doctors and officials. This news prompted an immediate probe by the Chinese police.

Thu
24
Oct

What Will Drive Ford to $30?

Stock Tickers

MSFT F

There was a point earlier this year when the Street was completely in awe about what Alan Mulally has done to turn around the fortunes of Ford (F), which, until his arrival, had struggled to execute.

Impressively, in only the first seven months of the year, Ford had already surpassed its entire cash total for 2012. This (among other things) not only propelled Mulally to the top of everyone's candidacy for CEO of the year, but some have even suggested he should replace Steve Ballmer as CEO of Microsoft (MSFT).

Fri
18
Oct

Baker Hughes Still Marred In Third Place

Baker Hughes logo

Stock Tickers

LNVGY BHI SLB HAL

Don't let the title of this article fool you. There are many companies that have done quite well for themselves operating not only out of the third slot, but, and at times, even lower.

Names like Lenovo (LNVGY), DHL and to a lesser extent Kmart, have posted decent results while operating behind multiple leaders.

In the case of Baker Hughes (BHI), which has consistently ranked third behind leaders Schlumberger (SLB) and Halliburton (HAL), I've been waiting for the company to finally take that extra step forward. It hasn't happened.

Fri
18
Oct

There's Still Plenty to Love With Schlumberger

Stock Tickers

SLB HAL BHI

The last time we talked about oil services giant Schlumberger (SLB), I told you that the stock was heading to $90. This was back in August when shares traded at around $81. My justification the price target then was as follows:

"To reach $90, the company only needs to trade at 10 times forward EBITDA, (earnings before interest, tax, depreciation and amortization). With the stock now trading at just 8-times 2014 EBITDA projections, the next couple of quarters should yield better results, which should raise these estimates higher. In the meantime, the stock seems cheap when considering that the company has not only a strong share buyback program, but also a solid dividend policy."

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