Why TESARO Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company TESARO (NASDAQ: TSRO  ) has received the dreaded one-star ranking.

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

TESARO facts

Headquarters (founded)

Waltham, Mass. (2010)

Market Cap

$1.3 billion

Industry

Biotechnology

Trailing-12-Month EBITDA

($63.4 million)

Management

Co-Founder/CEO Leon Moulder
Co-Founder/Chief Scientific Officer Mary Hedley

Trailing-12-Month Return on Equity

(51.4%)

Cash/Debt

$198.6 million / $0

Competitors

Merck
Pfizer

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

On CAPS, 26% of the 19 members who have rated TESARO believe the stock will underperform the S&P 500 going forward.

Just today, one of those Fools, All-Star zzlangerhans, touched on the stock's seemingly unsustainable valuation:

I'm not sure how much value the street is assigning to each of Tesaro's discordant developmental drugs but I'm pretty sure the total shouldn't be over a billion bucks. Rolapitant will be competing against multiple generic antinausea drugs from the same and different classes by the time it gets approved, if it ever does. Their PARP inhibitor niraparib and ALK inhibitor TSR-011 are early in development and likewise have competition from multiple companies with more resources and better track records. Tesaro might be an interesting spec play at a [$300M] cap but over [$1.2B] it's a bloated pig ready for slaughter.

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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 July 17, 2013, at 12:26 PM, tjsimone wrote:

    Brian.....seems like your research is confined to zzlangerhans quotes! Do you do any of your own research. Better yet, why don't you just quote yourself......

    btw 26% of 19, means 5 people think it ill under-perform... 14 think it will either be in line or OUT-PERFORM...

    I know its complicated math and all...

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