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All That Jazz (JAZZ)

 February 10, 2011 08:17 PM

(by Mike Cintolo, editor Cabot Top Ten Weekly) The visible growth story at Jazz Pharmaceuticals (JAZZ) is the narcolepsy treatment Xyrem, which accounts for 85% of revenues.

But Jazz has great potential to make big money with other drugs too—all of which focus on the chemistry of the brain.

Thanks to patents, Jazz has a decade to run with Xyrem before generic competitors can enter the market. 

Meanwhile, its drugs have potential to treat and/or cure obsessive-compulsive disorders, anxiety disorders, ?bromyalgia, epilepsy and restless leg syndrome.  

And investors have been busily climbing on board in recent months as they become aware of the company's great growth potential.  

But by our rough yardstick, the stock is not yet particularly overvalued, especially if one or two of its drugs in development bear fruit.  

The company turned pro?table ?ve quarters ago. Furthermore, the company's pro?t margin has been expanding rapidly in recent quarters.

And while we recognize that there are limits, the trend is heartening. Fourth quarter earnings will be released soon, though we don't have a date.

The company expects earnings of $0.53–$0.58 per share, while analysts' mean estimate is $0.59.

This marks the third appearance of JAZZ among out Top Ten since early December, and probably not the last.  

The stock has spent the past few weeks building a tidy base centered on 22. If you own it from a previous recommendation, hold on tight. If you're not on board, you can buy now with a stop just south of 20.


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