1-Star Stocks Poised to Plunge: Inhibitex?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biopharmaceutical company Inhibitex (NAS: INHX) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Inhibitex's business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||Alpharetta, Ga. (1994)|
|Market Cap||$1.1 billion|
|Trailing-12-Month Revenue||$2.1 million|
|Management||CEO/CFO Russell Plumb|
Founder/Chief Scientific Officer Dr. Joseph Patti
|Return on Equity (Average, Past 3 Years)||(80.9%)|
|Cash/Debt||$52.7 million / $386.7 thousand|
|Competitors||Gilead Sciences (NAS: GILD) |
GlaxoSmithKline (NYS: GSK)
Merck (NYS: MRK)
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 57% of the 120 members who have rated Inhibitex believe the stock will underperform the S&P 500 going forward. These bears include jed71 and fellow Fool Sean Williams (TMFUltraLong), who is ranked in the top 0.5% of our community.
Just last week, jed71 touched on Inhibitex's seemingly unsustainable price run: "This might be the fastest 30-40 points I ever make in [CAPS]. I am anticipating a fast and very harsh pullback, when shareholders finally realize how overbought this issue is."
In fact, Inhibitex sports an astronomical price-to-sales multiple of 514. That's obviously a massive premium to larger rivals Gilead (3.6), Glaxo (5.2), and Merck (2.2).
CAPS All-Star TMFUltraLong elaborates on the Inhibitex bear case:
Definitely not feeling the Tulipmania buzz in the hepatitis C sector. Couldn't stand the premium that Gilead ponied up for Pharmasset and see even less of a chance of that happening to Inhibitex. Not even out of phase 2 clinical trials, yet a market cap north of $1.1 billion makes little sense to me. Plenty of competition already out there with significantly more cash than Inhibitex. This is a flash in the pan if you ask me.
What do you think about Inhibitex, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Interested in another easy way to track Inhibitex? Add it to your watchlist.
At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Gilead and Glaxo. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.