noah kiedrowski Archives - Page 39 of 45

Disney Can't Seem To Breakout

Posted on September 6, 2016 by Noah Kiedrowski

Introduction

The Walt Disney Company (NYSE:DIS) can’t seem to get out of its own way when it comes to breaking out of this chronic stock slump after moving from the $120s in late 2015 to being stuck in the $90 range all throughout 2016. This perpetual slump is almost entirely attributable to the decrease in ESPN subscribers and thus revenue and profit from their Media Networks segment. Excluding ESPN, Disney has been executing well and reporting record numbers throughout its other business segments. Disney has a deep and diversified enough entertainment portfolio to make a compelling case that these ESPN fears are overblown. Disney’s portfolio consists of Marvel Entertainment, Lucasfilm, Pixar, ESPN, ABC, a 32% shareholder in Hulu and of course the core Disney franchise (Disney Studios, Disney consumer products, Parks and Resorts and Disney Cruise Line). The revenue stream from these assets is as diverse as the assets themselves. The ESPN franchise within the Media Networks segment generates revenue/operating income that is disproportionate to the amount of the company’s overall revenue and operating profit. Thus, one can see why investors were spooked after two consecutive significant declines in ESPN numbers in Q4 2015 and Q1 2016. The decreases in revenue within this segment have been arrested and on the rebound due to measures put in place at Disney. As this revenue stream slowly recovers and investors can rest assure, Disney will retrace the $120 level. In the meantime all other segments are performing well and coupled with dividends, share buybacks, a P/E ratio of ~17.0 and currently sitting at a 52-week low (excluding the flash crash in February), I’d be a buyer of the stock at these levels. Continue reading "Disney Can't Seem To Breakout" →

McKesson Pressured Over Drug Pricing Concerns

Posted on September 1, 2016 by Noah Kiedrowski

Introduction

McKesson Corporation (NYSE:MCK) along with other pharmaceutical distribution companies such as Cardinal Health and AmerisourceBergen have been under tremendous pressure as of late due to political pressures regarding the pharmaceutical supply chain and drug pricing concerns. I recently wrote an article “McKesson Jumps 34% Off Lows – Now What” stating that the easy money had been made from the ~$150 level to the roughly ~$200 level. I also pointed out that greater than 98% of McKesson’s revenues come from pharmaceutical distribution and services domestically and abroad. Thus any impact to this business model will likely have direct negative implications with regard to revenues and EPS. At the closing of that article I stated that currently, McKesson’s P/E ratio sits at the top of its peer cohort and considering the stock has risen over 34% along with the potential erosion of the middle model, I’d be cautious buying at these levels despite additional upside based on its 52-week high of $240. Now enter the latest EpiPen fiasco and subsequent drug price scrutiny being thrusted into the spotlight. Due to a Tweet by Hillary Clinton regarding her distain for Mylan’s price increase, McKesson saw a $7 per share drop or roughly 4% drop in that same session. Since any disruption in this business model will negatively impact McKesson disproportionally compared to the insurance, pharmacy and pharmacy benefit manager (PBM) companies, I’d avoid McKesson especially after the ~30% move to the upside.

McKesson - Pharmaceutical Supply Chain Complexities

The interplay within pharmaceutical supply chain players can be a challenging dynamic to grasp. McKesson positions itself on the distribution side of the network, essentially serving as an intermediary between the drug manufacturer and the pharmacy. McKesson and other middlemen such as Cardinal Health and AmerisourceBergen purchase drugs directly from the manufacturer and then sell them to the pharmacy and capture the spread between the price they pay (to the drug marker) and the price they sell (to the pharmacy) the drugs. Below is a step-by-step breakdown of the pharmaceutical supply chain steps (Figure 1): Continue reading "McKesson Pressured Over Drug Pricing Concerns" →

The Presidential Nominees Are Set

Posted on August 19, 2016 by Noah Kiedrowski

The political lines have been drawn, it’s Clinton verses Trump. I written several pieces evaluating the massive sell-offs in the biotech sector. Utilizing the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) as a proxy, I proposed a loose correlation between opportunistic political posturing by political front-runners and the chronic price suppression of IBB. I content that political posturing played a significant role in the sell-off of the healthcare cohort and more specifically biotech stocks. Drug pricing was used as a centerpiece as the scapegoat for political gains. Throughout this political process, this rhetoric has negatively impacted the sector. IBB fell from $401 in July of 2015 to $240 in February of 2016 or alternatively a 40% hit. This sell-off coincided with political rhetoric aimed at the collective cohort of healthcare and biotech companies. I strongly felt that these events were seasonal and would eventually subside without any significant impact to the underlying stocks within IBB. I felt this political induced sell-off presented a great buying opportunity after the 40% decline. I put my money where my mouth was by purchasing two tranches of IBB at a strike price of $250 in February and June during the market-wide sell-off and the Brexit, respectively. I feel that this is great entry point for any long-term investor that desires exposure to the biotechnology sector.

Are Drug Prices Really The Culprit?

In terms of the overall cost to the healthcare system, drugs comprise less than 10% of the pie. Allergan CEO Brent Saunders stated in an interview with Jim Cramer on Mad Money (Figure 1): Continue reading "The Presidential Nominees Are Set" →

CVS Delivers Strong Second Quarter

Posted on August 11, 2016 by Noah Kiedrowski

Introduction

CVS Health Corporation (NYSE:CVS) recently announced fantastic Q2 2016 numbers across the board. Increased EPS growth, revenue and free cash flow coupled with dividends and share buybacks bode well for CVS investors. CVS’s acquisitions of Target pharmacies and Omnicare are becoming fully integrated under the CVS umbrella. Collectively, these are great attributes that drive shareholder value over the long-term. I’ve written several articles presenting a compelling investment opportunity in the growing healthcare space via CVS. My investment thesis is based on the fact that CVS has been highly acquisitive, continues to deliver robust earnings growth, revenue growth, growing dividends and has an aggressive share buyback program in place. CVS recently reported fantastic quarterly results for Q2 2016 in 2016, positioning itself for long-term success. With its recent acquisitions of Target’s pharmacies and Omnicare, these proactive measures will significantly expand its presence and ability to dispense prescriptions to the general public and in long-term care facilities. As healthcare costs continue to rise (specifically prescription drug costs) and the population continues to age with the elderly comprising a larger segment of the overall population, CVS looks poised to benefit. The release of its Q2 2016 earnings reiterates this premise while the company is maintaining its growth narrative. I content that CVS will continue to deliver sustained growth and position itself for long-term success to drive shareholder value. Continue reading "CVS Delivers Strong Second Quarter" →

Tag: noah kiedrowski

Disney Can't Seem To Breakout

Introduction

McKesson Pressured Over Drug Pricing Concerns

Introduction

McKesson - Pharmaceutical Supply Chain Complexities

The Presidential Nominees Are Set

Are Drug Prices Really The Culprit?

CVS Delivers Strong Second Quarter

Introduction

It’s not goodbye, it’s hello Magnifi!