Wednesday, February 09, 2005

M&A Week

So this is the year of the rooster. I wonder what this means for the financial markets?

Anyways... Three of my holdings made acquisitions this week. Here they are: (1) Invitrogen acquires Dynal Biotech, (2) Genzyme acquires Verigen and (3) Cytyc acquires Proxima Therapeutics. Looks like M&A activity is starting to pick up in the biotech area.

I would have to say the Invitrogen deal was the most exciting of the three deals. Why do you say? Well, the Invitrogen deal is immediately accretive to earnings. We're talking about some nice numbers. They expect this deal to add $0.06 to earnings in 2005 and $0.24 to earnings in 2006. That's why the stock went up big yesterday. I still see much more upside in Invitrogen. These are the deals I like!

Looks like today was a day for "profit taking" for the overall market. Fisher Scientific reported good numbers, beat by a couple of pennies, but the stock fell anyways. The only reason I can find for the sell off was the guidance for Q1 earnings (they guided at the lower end of analyst estimates for Q1). But they increased free cash flow projections and reiterated fiscal year earnings. I actually see this as a slight plus due to the higher free cash flow. Free cash flow is how you really determine the companies valuation. Anytime you increase free cash flow, that's a big plus.


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