The crowd prodding MedImmune (MEDI ) to put itself on the block is apt to get bigger--even though the seventh-largest U.S. biotech has rejected such a move. David Katz, president of Matrix Asset Advisors, which owns 1.8 million shares, has urged the board to sell to a strategic buyer, noting that MedImmune has "world-class products and intellectual property" whose value can best be marketed by a biggie such as Pfizer (PFE ), Merck (MRK ), GlaxoSmithKline, (GSK ) or Johnson & Johnson (JNJ ). Its products include FluMist, a nasal spray vaccine, and Synagis, an injectable antibody to treat respiratory infections in infants. "A number of the bigger stockholders agree with us," says Katz, who figures MedImmune, now trading at 33, is worth 45. Among analysts who share Katz's view is Geoffrey Porges of Sanford C. Bernstein, who says management and the board should "actively consider the sale of the company to a major pharmaceutical buyer that has the capital, expertise, and infrastructure to more effectively manage and commercialize the product portfolio." Based on its earnings potential, MedImmune's worth is in the mid-to-high 40s, says Porges. He sees earnings of 26 cents a share in 2006 and 88 cents in 2007, vs. a loss in 2005.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial