Everyone has heard of pharmaceutical powerhouses like Pfizer (NYSE:PFE), GlaxoSmithKline (NYSE:GSK) and AstraZeneca (NYSE:AZN), but what about the smaller drug makers?
The fact remains that there are hundreds of companies furiously working to meet 21st Century medical needs, and there is plenty of demand to go around. So, let’s take a moment to highlight Dyax (NASDAQ:DYAX), who is a smaller bio-pharmaceutical player, but still enjoys booming demand for its anti-inflammation treatment.
Recommendation: Hold
Company Overview: Dyax is in the business of “Novel Biotherapeutics”. Specifically, the company’s flagship treatment, KALBITOR (encallantide), is a prescription treatment for Hereditary angioedema (HAE), which is a rare and serious immune system disorder that causes inflammation. The drug is enjoying a growing base of patients that use this treatment. Dyax is also researching broader applications for this drug so that it could potentially treat other angiodema-related issues. The company currently has 18 products that it is testing through its Licensing and Funded Research Program. In 2011, the company brought in $23 million in sales.
Industry Breakdown: There are 413 companies in the biotechnology industry, and of those, Dyax is a moderately-sized player (its market cap is ranked at no. 147). The company scores decently in terms of price/earnings to growth ratio (75th). And, even with -8% sales loss, the company still pulls off a good ranking relative to the rest of the industry (56th). Finally, Dyax’s long-term growth rate of 4% is 71st in the industry.
Earnings Buzz: In the most recent quarter, this company posted a hefty loss of (14) cents per share; unfortunately this missed analyst estimates by 40%. Dyax is scheduled to report earnings on April 26, but this earnings announcement may not be anything to write home about. Currently, Dyax is expected to narrow its loss from (11) cents per share in Q1 2010 to (9) cents per share. Meanwhile, sales growth is expected to climb 46.7%.
Current Ratings: Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. This stock has gained some modest ground in the past 12 months; this time last year, DYAX was a F-rated strong sell. Since then, the company has slightly firmed up its fundamentals; Dyax Corp.’s earnings momentum is good. Operating marging growth, earnings growth, earnings surprises and return on equity are middle-of-the-road.
However, the remaining three fundamental variables, including sales growth and cash flow, are quite weak. On the fundamental side, there is plenty of room for improvement. What keeps this stock at a hold is a mediocre level of buying pressure—any ground lost on this front would send this stock into sell territory.
Bottom Line: Because it earns a C-rating, Dyax is a hold.
Sound Off: What do you think about DYAX? Are you a buyer at current prices? Let me know what you think by posting on our wall on Facebook.
