Why NPS Pharmaceuticals Inc. Shares Surged Yet Again

NPS Pharmaceuticals shares shoot to the moon for a second straight day as the rumor mill kicks into high gear.

Jun 2, 2014 at 2:03PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of NPS Pharmaceuticals (NASDAQ:NPSP), a biopharmaceutical company that develops therapies to treat rare diseases, soared as much as 22%, its second consecutive day of double-digit gains, as the rumors build around a potential bid for the company from Shire (NASDAQ:SHPG).

So what: As a quick refresher, a move higher by as much as 26% occurred on Friday following word from FT Alphaville via its uncited but purportedly reliable sources that Shire was preparing to make a bid of as much as $40 per share for NPS Pharmaceuticals, which would value the company at more than $4 billion. Over the weekend, U.K.-based publication, The Times, added to the speculation by reporting that Shire had lined up a $5 billion credit facility with Citigroup to finance a takeover of NPS Pharmaceuticals. According to The Times, NPS had originally rejected Shire's attempt to woo its board of directors per insiders familiar with the matter, but is in discussion with Shire for the time being. Investors are also enjoying the "$5 billion" credit facility remark which could allow Shire to make a bid of up to $47, which is markedly higher than the $40 figure which FT Alphaville threw around on Friday.

Now what: Again, as a reminder, it's generally not in your best interests to chase a stock being rung through the rumor mill higher. More often than not rumors turn out to be nothing more than hot air and you can quickly find yourself in the losing column if you've been trading on your emotions rather than long-term common sense. With that being said, I do fully understand the reasoning behind a bid for NPS Pharmaceuticals if Shire is planning to follow through with an offer. NPS' only approved drug, Gattex, for short bowel syndrome is an orphan therapy with a hefty price tag that's protected from generic competition for a long time. In other words, NPS could generate instant EPS accretion for whomever buys it. I like NPS the company and it's a situation worth monitoring, but I wouldn't suggest chasing it higher here.

NPS Pharmaceuticals may have soared yet again, but even it's unlikely to be able to keep pace with this top stock over the long haul
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Citigroup. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers