2-Star Stocks Poised to Plunge: Lexicon Pharmaceuticals?
Jul 20th 2012 3:40PM
Updated Jul 20th 2012 3:48PM
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biotech company Lexicon Pharmaceuticals (NAS: LXRX) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Lexicon's business and see what CAPS investors are saying about the stock right now.
|Headquarters (founded)||The Woodlands, Texas (1995)|
|Market Cap||$1.4 billion|
|Trailing-12-Month Revenue||$1.6 million|
|Management||Co-founder/CEO Arthur Sands
Co-founder/Chief Scientific Officer Brian Zambrowicz
|Return on Equity (average, past 3 years)||(41.8%)|
|Cash/Debt||$253.2 million / $24.5 million|
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 20% of the 64 All-Star members who have rated Lexicon believe the stock will underperform the S&P 500 going forward.
In late June Lexicon announced positive results from the phase IIb trial of glucose transporter inhibitor LX4211. I don't really have a complaint about the data. It looks good. But the study doesn't clearly establish where LX4211 might fit into diabetes management, a rapidly evolving field with numerous proprietary and generic therapies available. I think when Lexicon has a positive catalyst, investors sometimes forget about their enormous 480M share count and concurrent bloated market cap. When the share price hit [$3.20], the market cap approached [$1.5B]. That's quite a chunk of change for LX4211 and some other less inspiring pipeline candidates, and a hard level of interest to maintain in the years ahead before LX4211 can be commercialized.
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Exelixis. Motley Fool newsletter services have recommended buying shares of Exelixis. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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