See WPI's official
website
here.
See the Yahoo!
Finance profile for
WPI
here.
After this segment, you
can see Jim's
Sudden:Death picks
here...
. . . .
.
JJC: Two
weeks ago,
Genentech Inc. (DNA)'s
stock got clubbed... It got
clubbed all the way down to
$75.93, courtesy mainly of a
lengthy hit-job in the New
York Times about how
Avastin, DNA's miraculous
life-extending cancer drug
was too expensive...
I saw what had happened, the
farce of this best-of-breed
biotech stock getting
knocked down, because of a
story that had nothing to do
with its business and
everything to do with its
image... At the end of the
day, the Street cares about
earnings, not a nice guy
reputation, and I told you
buy, buy, buy... Now, with
Roche offering to buy the
best of the company, and the
stock up 23.6% from my
recommendation, it looks
like I'm not the only one
who thought it was a
bargain...
I'm not here to take a
victory lap, I'm here to
tell you what I think
Roche's bid means for the
future and the fate of other
biotech stocks and
pharmaceutical stocks in
general...
Roche, which is a Swiss
company, took advantage of
the dramatic decline in the
US dollar, and the negative
sentiment created by
countless articles that were
like the New York Times,
that complained bitterly
about the high prices of
live-saving drugs, to
bolster its own enemic
pipeline, by buying the rest
of DNA and acquring in full,
what I think may be the
greatest wanted drug of all
times...
What does it mean?...
What does this deal mean to
you, other than big profits,
if you took my advice and
bought DNA... First of all,
to me it confirms the idea
that the dollar is so weak,
that for European companies
it's worth it just to buy
pretty much any company that
is name brand... Hey, don't
forget, Inbev's acquisiton
of
Anheuser-Busch (BUD)
which, by the way, I believe
is a total creation from the
weak dollar... BUD was too
expensive otherwise...
Even more important than
that, I believe that it also
confirms something that I've
been saying for a long
time... that the biotechs
are the best group to buy
when we're in the midst of a
bank led slowdown... This is
right out of the 1990
playbook, the last time we
were in this position... And
back then, the biotechs, led
by
Amgen (AMGN),
delivered enormous gains as
their consistant earnings
and high growth made them
glow in comparison to the
collapse of the
financials...
I traded in 1990, and I
remember this... There were
many biotech stocks, even
ones that were terrible,
like Azoma, I mean,
unbelievable... Or, okay,
like a
Cephalon Inc. (CEPH)...
just Centacore was one of my
biggest hits that year...
All right, right now, the
whole group is running, just
like '90... AMGN is rallying
off of the top line data for
its osteoperosis drug...
Biogen Idec Inc. (BIIB)
is soaring... Take a look a
the section of todays Wall
Street Journal... And CEPH,
Celgene Corporation (CELG)
and
Genzyme Corp. (GENZ),
kicking butt left and
right... Now, be careful...
We're going to get some
weakness tomorrow in this
whole group because
Merck (MRK)
suspended its earnings
guidance, courtesy of
endless Vitorin problems
after the close...
But what we want to know, in
light of Roche's bid for
DNA, is who else fits the
pattern of the recent
takeovers... And not just
DNA, but also
Barr Labs (BRL)...
that was last week's
windfall... What other
American drug companies look
like right takeover targets
for old-fashioned pharma
companies looking to expand
the weak pipelines... We're
never going to recommend a
stock we don't like on the
fundamentals, just for
takeovers, don't worry...
Now, we are not
arbitragers... those are astute
investors, who play stocks
once they've received
bids... But we are confident
that Roche would have to pay
around $100 to get the rest
of DNA...
Who else is up?... All
right, Forest
Laboratories Inc. (FRX)
reports tomorrow, I'm wary
about that one... It's
earnings are too dependent
on one drug, Lexapro... It's
most important pipeline drug
is too controversial for
me... But you might want to
give it a look if the
quarter and confrence call
sound good and it's down a
lot because of Merck...
Imclone Systems Inc.
(IMCL)
and
Genzyme Corp. (GENZ)
are both cheap, relative to
other biotechs... Mark them
as possibilities, but
they're not my faves...
No, I think the drug stock,
not biotech, but drug stock
as I see most likely to fit
the pattern of
Barr Labs (BRL)
is Watson Pharmaceuticals
Inc. (WPI)...
WPI has 150 generic products
and only 27 branded ones...
I usually stay away from
generic drug makers, anyone
who's watched the show knows
that... But I care less
about what it's selling now
and more about what it has
in the pipeline... WPI has
60 abbreviated new drug
applications pending at the
FDA... That's a pipeline
that could be worth over $2
billion smackers... And I
should note that this is
just a $3 billion company...
Now last year WPI's founder,
CEO and Chairman announced
his retirement, and when
guys like that leave the
company, it's often a sign
that a takeover could
occur... Stock was 4 points
below a 52-week high...
Let's get some weakness from
Merck... Maybe then we can
pull the trigger... WPI reminds me a
lot of BRL, another company
with a mixture of generic
and branded drugs that got
that huge bid from
Teva Pharmaceutical (TEVA)
last week... That stock
almost doubled from where it
was when they had problems
with a previous drug...
Can lightning strike
twice?... Frankly, in
pharma, I think we're in a
lightning storm... I'm
pretty sure it could happen
again...
. . . .
.
The Bottom Line!:
The weak dollar, the
strength of biotech during
bank and economic slow
downs... These mean we could
see more bids like the one
Roche is making for
Genentech Inc. (DNA)...
Tomorrow, pharma will be
down, courtesy of the
problems at
Merck (MRK)...
We need to pick at biotech
and we need to find the next
drug company that has good
enough fundamentals to
thrive, even without a
bid... I think Watson
Pharmaceuticals Inc. (WPI)
could be the most likely
company to be bought, and it
will be fine even if it
isn't... But there are
plenty of American drug
companies out there too that
might be on the fly and be
worth buying on Merck
generated weakness.
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Final Segment 2
Final Segment
2 Title:
'Ticked Off'
'On The
Line'
Rep. Gary
Ackerman,
(D) New York
. . . .
.
Featured
Stock(s):
No specific stock picks.
See comments below.
After this segment, you
can see Jim's
Sudden:Death picks
here...
. . . .
.
Jim's Comments BEFORE
the interview:
We cared passionately, and
have for a very long time
on this show about
restoring the uptick rule,
which we think will
relevel the playing
field... Right now, shorts
can scare you a lot more
than longs can frighten
you... Shorts can drive
things down that don't
have to wait for a buyer
to come in... The whole
time I was in the game you
had to wait for a buyer,
this is just too easy to
destroy stocks and create
and sow a lack of
confidence that can bring
institutions down... I've
got someone who agrees
with me... He's in
government... On the line
now is Congressman Gary
Ackerman, who believes as
I do, that we need to
restore the uptick rule...
Representative Ackerman,
welcome to Mad Money...
. . . .
.
Jim's Comments AFTER
the interview:
All right... We care about
this because I want
investors like you to get
a fair shake... There is a
lot of people who say,
Jim, come on, the playing
field is level now... Hey,
come on, I shorted stocks
for a living... I know an
unleveled playing field
when I see it... I'm
right, the academics are
going to be wrong again...
The academics hate me... I
think they're just
jealous...
■
Stock Snapshots - Includes
all stocks mentioned above
■
Jim
Cramer's
rating on
this stock
STOCK
SYMBOL
Closing
price
that
day
Opening
price
next
day
Full Company
Name/Comments
(see comments above for
each)
na
na
na
No specific stock picks.
See comments above.
[
end of final segment ]
Go to the SUDDEN:DEATH
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In other words, this is the
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This recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
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Stumped. - Of the
2,000+ stocks that Jim
Cramer has in his head, for
which he has an informed
opinion, he sometimes comes
across a caller with a stock
he does not know well enough
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indicates he is stumped and
will have to come back to
it, after he does some
homework of his own on
the stock. This
usually occurs during the
Lightning Round, when Jim
does not know in advance who
is calling, or what their
stock question is about.
Definitions of key phrases
used by Jim, known as
"Cramerisms":
Definition: 'Pull the
trigger' is Jim's phrase for making
the decision at that point to trade -
either to 'buy' or
to 'sell' (although he
usually uses the phrase for
buying), as if to say you
should feel comfortable
enough to make the final
decision without looking
back...
Definition: 'Ring
the Register' is Jim's phrase for
selling a stock, and making
it a final sale, that you
should not look back on.
Put it behind you.
Definition:'Let It Come In' indicates how you
may wait for it to pull back, or have the
stock price come down briefly, as your
chance (after letting it come in) to buy
the rest of your position (i.e., total
number of shares you own in that stock).
Definition:'backing it up'
or 'doing a 'mon-back' is Jim's
phrase for the metaphor of backing up a
truck to load up on a stock by buying
it. 'Mon-back is short for the
imaginary worker saying, 'Come on
back...' as the truck is backing up to
receive its load... Notice that we use
the little truck icon to indicate where
Jim has mentioned this.
Translation for buying
stocks: This
recommendation by Jim
indicates that, after you do
your own
homework on the stock,
you should feel comfortable
loading up on it, as it is
in a good position to be
bought at this point.
See more
"Cramerisms" & other
financial phrases
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upcoming site that provides
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Jim Cramer recommends after
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