Sunday, August 12, 2007

Backed It Up In Genzyme

"Genzyme Corp. , the world's third-biggest biotechnology company, can't seem to do anything right." This was the quote from a Reuter's article published on August 9th. I used the proceeds from the Shire PLC (Ticker: SHPGY) sale and backed up the truck in Genzyme (Ticker: GENZ) at $62.48 (in my Roth IRA account). Did I jump in too soon? Maybe a bit early…, but I have no regrets. As I've said before, these shares are cheap and we're pretty much close to the bottom at these levels. The stock is trading at 16 times 2008 earnings with a long term growth rate of ~ 20%. You rarely get a chance to pick up bargains like this. The company has been aggressively buying back stock. In June, the company purchased ~ 1 million shares at an average price of $65.48 and from July 1st to August 7th, the company purchased ~ 1.8 million shares at an average price of $63.98. The companies got your back with a big buyback ($1.5 billion over a 3 year period). Analysts have been cautious because they see potential competition from a small upstart company, Amicus Therapeutics (Ticker: FOLD). We'll just have to see if Amicus can pull it off… But I'm placing my bet with Genzyme.


At August 16, 2007, Blogger Unknown said...

I like GENZ, and believe it has a very appropriate valuation. The question I always have is whether to have CELG or GENZ in the portfolio. What made you choose GENZ first?


At August 18, 2007, Blogger Money Turtle said...

I also have a few shares of Celgene in my portfolio. Genzyme is simply a much safer bet with a low valuation. It's a solid 20 percent grower for the next several years. I see multiple expansion as the Street becomes more confident in Genzyme's 20% growth forecasts. Celgene on the other hand is high growth story. Lots of momentum people in this stock so there is no room for error in Celgene. Both will do well over the long term.


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