2-Star Stocks Poised to Plunge: Ligand Pharmaceuticals?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biotechnology company Ligand Pharmaceuticals (Nasdaq: LGND  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Ligand's business and see what CAPS investors are saying about the stock right now.

Ligand facts

Headquarters (founded)

La Jolla, Calif. (1987)

Market Cap

$347.1 million

Industry

Biotechnology

Trailing-12-Month Revenue

$30.1 million

Management

CEO John Higgins
CFO John Sharp

Return on Equity (average, past 3 years)

(5.1%)

Cash/Debt

$10.4 million / $29.5 million

Competitors

Eli Lilly (NYSE: LLY  ) Merck

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 15% of the 39 All-Star members who have rated Ligand believe the stock will underperform the S&P 500 going forward.

This past summer, one of those Fools, zzlangerhans, succinctly summed up the bear case for our community:

I used to think that Ligand was a well-run and productive operation, successfully progressing drugs through early stages of development and then licensing or partnering them with large pharmaceutical companies. ...

In 2012, I've come to the conclusion that Ligand is more like a schizoaffective chimpanzee with a box of Godiva chocolates. They take a bite of one, and throw it on the floor. Take a bite of another, throw it at another chimpanzee. Take another one and mash it into their fur. The company seems to have an unending appetite for new pipeline projects, mostly picked up from other failed small pharmas, yet none ever translate into significant revenues. ...

Meanwhile, Ligand stock is rising rapidly with a market cap of [$320M] as of this writing. ... Ligand makes more money selling Captisol to their partners for use in clinical trials than it does on royalties from their entire history of R&D. Hate to think what's going to happen if those trials don't end up in FDA approval of any Captisol products.

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Fool contributor Brian D. Pacampara has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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 Motley Fool has a disclosure policy.


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