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: On a miserable day for so many stocks, shares of Medicines Co.
So what: Teva had challenged Medicines' patent on Angiomax, you see, and wanted to market a generic version of the anticoagulant. Seeing as Medicines derives 94% of its U.S. revenues from the drug, that would have posed a bit of a problem for Medicines. But in resolving the litigation, Medicines managed to convince Teva to hold off on marketing its generic alternative until June 2019 -- delaying its day of reckoning by nearly a decade.
Now what: I explained back in May why I thought Medicines' stock offered a good bargain for speculative investors. I must admit, though, that when I see analysts today suggesting the stock is headed for long-term declines in earnings -- on the order of 9% per year for the next five years -- I'm hesitant to re-up on that recommendation. Although Medicines' stock still looks tempting at less than 8 times trailing earnings, if I owned it today I'd be sorely tempted to cash in on the stock's sudden surge and find something with a little more growth potential ahead of it.
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