History is a guide, VRX reminds me of ELN# Stock
a*1
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Elan was an Irish biotech company. It got aggressive in accounting and
acquisition during the stock boom in 2000 and stock ran several fold to 67.
Its problem was later exposed in 2002 and company stock went downward spiral
and its survival was on the line. The stock dropped to $1.
However, it was still a solid company with solid asset, pipeline and drugs
to sell. Later, the stock bounced back to the high of $30 and was
successfully sold.
VRX is very similar to Elan in terms of product line and management behavior
. The problem is it accumulated huge amount of debt ($30B) to finance the
acquisition. When everything goes well, it is a wall street darling. However
, the debt will be a huge issue in current situation.
The upside might be 100%, but the downside can be 90% if it plays out like
ELAN. Having said that, the asset is real and the sum of part is certainly
larger than the whole. When everybody is talking about VRX bankruptcy, you
should be brave.
acquisition during the stock boom in 2000 and stock ran several fold to 67.
Its problem was later exposed in 2002 and company stock went downward spiral
and its survival was on the line. The stock dropped to $1.
However, it was still a solid company with solid asset, pipeline and drugs
to sell. Later, the stock bounced back to the high of $30 and was
successfully sold.
VRX is very similar to Elan in terms of product line and management behavior
. The problem is it accumulated huge amount of debt ($30B) to finance the
acquisition. When everything goes well, it is a wall street darling. However
, the debt will be a huge issue in current situation.
The upside might be 100%, but the downside can be 90% if it plays out like
ELAN. Having said that, the asset is real and the sum of part is certainly
larger than the whole. When everybody is talking about VRX bankruptcy, you
should be brave.
