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Why Anacor Is Poised to Pull Back

By Brian D. Pacampara, CFA - Apr 3, 2013 at 10:13AM

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Market-lagging returns could be written in this 1-Star.

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

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

Anacor facts

Headquarters (founded)

Palo Alto, Calif. (2000)

Market Cap

$224.6 million

Industry

Biotechnology

Trailing-12-Month Revenue

$10.7 million

Management

CEO David Perry
CFO Geoffrey Parker

Return on Capital (average, past 3 years)

(62.1%)

Cash/Debt

$45.5 million / $25.7 million

Competitors

Johnson & Johnson
Novartis
Sanofi

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

On CAPS, 40% of the 43 members who have rated Anacor believe the stock will underperform the S&P 500 going forward.

Earlier this morning, one of those Fools, All-Star zzlangerhans, succinctly summed up the Anacor bear case for our community:

As predicted, in March the stock rebounded from the weak phase III performance of tavaborole with positive results from dose-ranging phase II trial of AN2728 in atopic dermatitis. But [$220M] is simply too much for a phase II drug in the crowded indication of atopic dermatitis. Anacor will certainly raise big before getting close to topline data from a phase III trial of AN2728, and approval of Valeant's efinaconazole in May will provide another nail for tavaborole's coffin.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

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Stocks Mentioned

Sanofi Stock Quote
Sanofi
SNY
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Johnson & Johnson Stock Quote
Johnson & Johnson
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$181.09 (0.91%) $1.63
Novartis AG Stock Quote
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NVS
$91.46 (0.22%) $0.20

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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