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Payne's Picks

Is This Superbug Drug Company Right for Your Portfolio?

By Payne's PicksFOXBusiness

Cubist Pharmaceuticals a long-term buy?

FBN’s Charles Payne, NewOak Capital President James Frischling, small business expert Susan Solovic, retail analyst Hitha Prabhakar and Penn Financial Group founder Matt McCall on the outlook for Cubist Pharmaceuticals.

Let’s talk about Cubist Pharmaceuticals (NASDAQ:CBST).

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They are in the business of fighting superbugs. You know, those drug-resistant bacteria that bedeviled scientists for years - like certain strains of E.coli. It never goes away, it gets stronger and stronger.

Now here’s the good thing about this company, they’ve got three drug candidates that right now are in phase three trials, and four indications for those three.

In the meantime, it looks like its Cubicin is becoming a blockbuster. It is used to prevent skin infections from certain bacteria, but it also fights blood infections and certain heart disease.

And because of that, the most recent revenues came in pretty good, $309 million - up 16%. And earnings went up huge, from $0.41 to $0.58, year-over-year.

I also like the action on this chart. It looks like the stock is building a real nice base, it used to be resistance and now its support, and the next leg higher should lift the stock to $80.

Longer term it has potential to $95+. I wouldn’t consider it a trading vehicle, even though it is trading really great today.

Long term, I do like it. I would caution greater-than-average volatility.


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