Cambrex

In poking around about ABMD, I came across Cambrex (CBM). According to a recent article in Investor’s Business Daily, Cambrex assists big drugmakers and biotech companies, “providing processes and active pharmaceutical ingredients to help them start to manufacture commercial quantities of drugs.” The Company Profile on the Fidelity site says: “Cambrex Corporation, a life sciences company, provides various products and services for the development and commercialization of new and generic therapeutics worldwide. The company’s products comprise active pharmaceutical ingredients and pharmaceutical intermediates that are used in the production of prescription and over-the-counter drug products. It serves generic drug companies, and companies that discover and commercialize small molecule human therapeutics. The company sells its products directly, as well as through independent agents. Cambrex Corporation was founded in 1981 and is headquartered in East Rutherford, New Jersey.”

Cambrex has a market cap of $1.5 billion, and a TTM PE of 23.58. It’s EPS Growth (TTM vs. Prior TTM) is 72.03, giving it a 1YPEG of 0.33. It’s book value per share growth over the last five years is 19.4%.

It’s TTM Gross Margin is 48.44% and its TTM Operating Margin is 20.87%. Its TTM return on investment is 20.29%. Its total debt to equity ratio is 23.99%.

In the company’s July 30 earnings call, President and CEO Steve Klosk said that their 2015 plans included aggressive investment in future growth with more than $80 million earmarked for capital expenditures, including a large manufacturing expansion within their Charles City, Iowa site. This makes me a little concerned that this will be a rebuilding year; however, earnings appear to be very strong. I am interested in this company because of its high earnings growth and reasonable valuation, and also because it is in a profitable area of the market without seeming to take the risks of FDA approval that the larger biotech companies and drug companies take. I am going to continue to follow the company with an eye to making an investment, and would welcome any thoughts that others on the board might have.

Macculloch

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Hi Macculloch,
I looked at CBM before, and updated Kevin’s spreadsheet with their info, but held off on putting money where my research took me for two reasons.

My notes aren’t as great as they could be or should be to post on this board, but here they are anyways:

  1. Currency exchange. With the dollar strong I was left to believe some of their earnings come from overseas and is affected by currency exchange. I don’t know how great CBM management does in handling currency exchange or accounting for it, but I got the notion that it wasn’t great (ie. they were caught off guard or surprised by the effects on the bottom line).
  2. Regulatory approval. This goes more towards my poor understanding of the industry, but I am ignorant enough to withhold my hard earned cash because of it.

I hope this helps more than hinders any research/outcome you have come to.

Robert
no stake in CBM but it’s on my watchlist.

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