Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Buy, Sell, or Hold: Antares Pharma

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

When considering any stock for your portfolio, don't be swayed by just the positives. Examine its pros and cons, and decide whether it's possible upside outweighs its risks. Let's take a look at Antares Pharma (Nasdaq: ATRS  ) today, and see why you might want to buy, sell, or hold it.

Founded in 1979 and based in New Jersey, Antares sports a market capitalization of about $500 million. It's a pharmaceutical company specializing in self-injection and topical-gel products. Antares stock is up some 54% over the past year and has averaged gains of 22% annually over the past decade. That's enough to have some wondering whether they should jump in to share in profits, too, or whether the stock is no longer a good buy.

One reason to consider buying Antares Pharma is its business. With the world's population growing, getting older, and living longer, demand for health care products and services is likely to remain in demand.

Better still, unlike some drug-development companies, Antares isn't just working on some formulas that might or might not end up approved by the Food and Drug Administration. It actually has products on the market, generating revenue. And these products include some rather interesting ones, too -- such as pressure-assisted, needle-less injection technology and drug-delivery gels. If you don't like getting shots or taking pills, pay attention to Antares Pharma. (Self-injected drugs are also promising because they can cut down on health-care costs, if doctor-office visits aren't necessary when patients need shots.

Antares' pipeline features the Vibex MTX Medi-Jet drug delivery system that administers methotrexate to treat rheumatoid arthritis. Recent trials have been successful, and if it gains FDA approval, Antares will be marketing Vibex MTX itself (except in Canada) and will thus be able to reap more reward from it. The company is also looking to apply the same technology for testosterone replacement therapy. The more applications it's approved for (assuming that happens), the more money it can make.

Another thing going for Antares is its wide range of partnerships. Much of its revenue comes from Teva Pharmaceuticals (NYSE: TEVA  ) , which uses Antares technology in a human-growth hormone injection. (Teva is also looking to market a Vibex-based epinephrine self-injector.) Another big chunk of revenue is tied to Ferring Pharmaceuticals BV, which employs Antares technology with its own human-growth hormones. Watson Pharmaceuticals (NYSE: WPI  ) has begun selling a gel to treat overactive bladders with Antares technology, and BioSante (Nasdaq: BPAX  ) is hoping to win FDA approval for its LibiGel testosterone gel to treat female sexual dysfunction. Antares is also receiving licensing dollars from Pfizer (NYSE: PFE  ) , though it's not yet clear for what.

Other bullish signals for the company are some recent Wall Street analyst upgrades, though its important to remember that such analysts are not all alike, and many don't have the best track records. The folks at Guggenheim recently started covering Antares and slapped a "buy" rating on it.

The company's growth rate is another plus, with revenue recently rising more than 40%  over year-ago levels, and averaging more than 25% over the past five years.

A look at Antares' financial statements offers a few red flags. Net income is still negative, for example, despite rising revenue. That's not unusual for small, fast-growing companies that are heavily investing in their futures. But all other things being equal, it's always preferable to have profits. Free cash flow is also negative, though at least there's little to no debt. And despite a red bottom line, the company has been outperforming expectations.

The company's valuation is another consideration. On some measures, such as price-to-sales and forward P/E ratios, it looks overvalued. There's no current P/E because of net losses.

One concern that some have with Antares is the dilution of its stock. Indeed, the stock took a hit last month when the company issued 12.5 million new shares, thereby shrinking the value of existing shares. This generated millions of dollars for the company, but presumably, if it performs well, it soon won't need to issue more shares for cash. Shares outstanding have risen from 60 million in 2007 to 125 million recently.

Hold (off)
Given the reasons to buy or sell Antares Pharma, it's not unreasonable to decide to just hold off on it. You might want to wait for it to start posting a string of profitable quarters, or for it to earn FDA approval for one or more products. Or check out some other interesting biotech or pharmaceutical companies, to see if they inspire more confidence than Antares. Spectrum Pharmaceuticals (Nasdaq: SPPI  ) , for example, sells a colorectal cancer drug and seems attractively valued.

The verdict
I'm holding off on Antares Pharma for now, but I'm intrigued. Everyone's investment calculations are different, though. Do your own digging and see what you think. The company may perform spectacularly in the coming years, but remember that there are plenty of compelling stocks out there.

While you can certainly make huge gains in biotech and pharmaceutic stocks, the best investing approach is to choose great companies and stick with them for the long term. In our free report "3 Stocks That Will Help You Retire Rich," we name stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 26, 2012, at 6:19 PM, drew946 wrote:

    I own 100K shares of ATRS at an average cost of $2.68 per share. I believe that we are looking at a $12 - $16 stock within 12 to 18 months. I rate this stock as a buy.

  • Report this Comment On December 06, 2012, at 3:15 PM, Shadowplay1 wrote:

    I think the author covered the stock very well but lacks the in depth look at what management is building at Antares Pharma. Vibex MTX will be their golden egg and when it comes to full fruition,it will be to late to buy on the cheap.This is why the stock is being accumulated over the last two months.Once management releases the statement that the NDA has been filed with the FDA, I think you will see the stock take off. Anything under the 200 mda avg of $3.90 is steal.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2127197, ~/Articles/ArticleHandler.aspx, 10/20/2016 8:41:13 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 -4.58 -0.09%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:00 PM
ATRS $1.70 Down -0.01 -0.58%
Antares Pharma CAPS Rating: **
AGN $233.08 Up +4.17 +1.82%
Allergan CAPS Rating: ****
ANIP $66.77 Up +0.86 +1.30%
ANI Pharmaceutical… CAPS Rating: **
PFE $32.54 Down -0.06 -0.18%
Pfizer CAPS Rating: ****
SPPI $3.98 Up +0.03 +0.76%
Spectrum Pharmaceu… CAPS Rating: ***
TEVA $44.21 Up +0.87 +2.01%
Teva Pharmaceutica… CAPS Rating: ****