Has Elan Become the Perfect Stock?http://www.fool.com/investing/general/2013/02/11/has-elan-become-the-perfect-stock.aspx Dan Caplinger
February 11, 2013
Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?
One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Elan (NYSE: ELN) fits the bill.
The quest for perfection
With those factors in mind, let's take a closer look at Elan, noting that in light of recent events which we'll discuss below, all of these past financials are no longer indicative of the company's future.
Since we looked at Elan last year, the company has gained a point, adding to the two points it jumped from 2011 to 2012. But the stock hasn't responded positively, sinking by nearly 30% in the past year, and now, it faces a transformative event.
Elan is best known for its Tysabri drug, the multiple sclerosis treatment that it shared with Biogen Idec (NASDAQ: BIIB). Yet in the biggest news for the company of the past year, Elan decided to sell out its 50% share of Tysabri rights to Biogen, taking $3.25 billion in upfront cash, as well as royalties of 12% during the first year and a tiered 18% to 25% royalty on sales in subsequent years. The move should help Biogen compete more effectively against MS rivals by allowing it to coordinate sales of Tysabri with fellow MS drug Avonex and its soon-to-be-approved BG-12 oral drug without worrying about cannibalizing its own revenue stream.
For Elan, though, the deal leaves the company with plenty of cash and no clear substantial revenue from continuing operations. Anoth