This week, beleaguered specialty pharmaceutical firm QLT
With $270 million in cash and investments and only $170 million in long-term debt, QLT can afford to repurchase its shares without materially harming its balance sheet. Whether this is the best course of action for its shareholders is another question. The shares QLT has bought over the past year have been at an average price of $7.96, slightly higher than today's share price.
Ever since the regulatory approval of Genentech's
A share buyback is never a reason to invest in a stock in and of itself. If a company smartly buys back shares on the cheap when they are undervalued, this can boost an investor's returns significantly and be an effective use of capital, especially when compared to the negative tax consequences of paying out dividends. Even though revenue fell 28% last year, QLT's management has signaled what they think about the company's future.