Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biotechnology company AMAG Pharmaceuticals
With that in mind, let's take a closer look at AMAG's business and see what CAPS investors are saying about the stock right now.
AMAG facts
| Headquarters (Founded) | Lexington, Mass. (1981) |
| Market Cap | $347.9 million |
| Industry | Biotechnology |
| Trailing-12-Month Revenue | $63.6 million |
| Management | Interim CEO Frank Thomas Chief Medical Officer Lee Allen |
| Return on Equity (Average, Past 3 Years) | (40.4%) |
| Cash/Debt | $229.3 million / $0 |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 18% of the 234 members who have rated AMAG believe the stock will underperform the S&P 500 going forward. These bears include renalmd and All-Star zzlangerhans, who is ranked in the top 1% of our community.
Earlier this month, renalmd touched on a couple of AMAG's negatives: "Hasn't gotten into the hemodialysis market aggressively. Losing market share."
Yet despite this, AMAG sports a high price-to-sales ratio of 5.5. That represents a premium to much larger biotech plays like Amgen
CAPS biotech expert zzlangerhans elaborates on the bear case:
AMAG used to be one of my favorite trading stocks when Feraheme was still a bouncy little baby, full of potential. But Feraheme grew into a surly teen and is now a full-fledged juvenile delinquent, consistently delivering less in sales than the cost of marketing it. ...
AMAG has rebounded somewhat recently on changes in management, workforce reduction, and the termination of an ill-advised merger plan with Allos. Those developments are all well and good, but do nothing to assuage the reality that Feraheme sales will continue to wallow and the company will continue to burn cash. ...
I suspect most of the ebullience in the stock is related to speculation of a buyout, as the company has retained Jefferies to search for ways to "maximize shareholder value". But is there anyone who can make Feraheme work? AMAG had no shortage of resources for marketing, but the realities of reimbursement in the dialysis market worked against them. The buyout may still happen but I'd put those odds at less than 20%. In the meantime, the best way for shareholders to maximize value is likely to sell their stock.
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