What is Alexion Pharmaceuticals Predictability Rank?
3 (5)
Warren Buffett said many times that the companies he likes are:
1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.
It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.
GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.
Alexion Pharmaceuticals Predictability Rank Calculation
In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.
Our study may be subject to these biases and assumptions:
Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.
The correlation between business predictability and investment returns of a company is showed below.
Correlation Between Business Predictability and Investment Returns
| Predictables | Non-Predictable | All stocks |
|---|
| Total Number of stocks | 570 | 1833 | 2403 |
| Total Lost Money | 61 | 830 | 891 |
| Total Lost More Than 50% | 18 | 412 | 430 |
| Total Lost More Than 90% | 4 | 86 | 90 |
| Average Gain | 260.6% | 100.0% | 138.1% |
| Median Gain | 150.0% | 13.0% | 39.0% |
| Maximum Gain | 2852.0% | 11483.0% | 11483.0% |
| Maximum Loss | -100.0% | -100.0% | -100.0% |
| Annualized Average Gain | 12.7% | 6.7% | 8.4% |
| Annualized Median Gain | 8.9% | 1.1% | 3.1% |
For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.
| Predictability Rank | 5-Star | 4.5-Star | 4-Star | 3.5-Star | 3-Star | 2.5-Star | 2-Star | 1-Star (non-predictable) | Average among all |
|---|
| % Out of All 2403 Stocks |
3.3% |
2.9% |
3.7% |
3.3% |
3.3% |
3.7% |
3.3% |
76.3% |
100% |
| % that are in Loss (10y) |
3% |
10% |
8% |
9% |
11% |
18% |
16% |
45% |
37% |
| Average Gain (10y) |
364.6% |
330.9% |
278.0% |
235.1% |
243.5% |
227.8% |
154.8% |
100.0% |
138.1% |
| Median Gain (10y) |
238.5% |
193.5% |
171.0% |
159.0% |
132.5% |
113.5% |
87.0% |
13.0% |
39.0% |
| Maximum Gainer |
2228.0% |
2547.0% |
2452.0% |
2852.0% |
2432.0% |
1892.0% |
1807.0% |
11483.0% |
11483.0% |
| Maximum Loser |
-82.0% |
-53.0% |
-67.0% |
-100.0% |
-83.0% |
-100.0% |
-78.0% |
-100.0% |
-100.0% |
| Annualized Average Gain |
15.4% |
14.6% |
13.2% |
12.0% |
12.2% |
11.7% |
9.1% |
6.7% |
8.4% |
| Annualized Median Gain |
12.1% |
10.6% |
9.8% |
9.3% |
8.2% |
7.3% |
6.0% |
1.1% |
3.1% |
For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank
Also read:
Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety
Alexion Pharmaceuticals (Alexion Pharmaceuticals) Business Description
Traded in Other Exchanges
N/A
Address
121 Seaport Boulevard, Boston, MA, USA, 02210
Alexion Pharmaceuticals specializes in developing and marketing drugs for rare, life-threatening medical conditions. Its blockbuster product, Soliris, is approved for paroxysmal nocturnal hemoglobinuria (PNH), atypical hemolytic uremic syndrome (aHUS), generalized myasthenia gravis (gMG), and neuromyelitis optica spectrum disorder (NMOSD). Next-generation Ultomiris is approved in PNH and aHUS. Strensiq and Kanuma target ultrarare metabolic diseases. Alexion's pipeline targets rare diseases with high unmet need in hematology, nephrology, metabolic diseases, neurology, cardiology, and other areas.
Executives
| Daniel Bazarko |
officer: SVP, Controller, CAO |
C/O ALEXION PHARMACEUTICALS, INC. 121 SEAPORT BOULEVARD BOSTON MA 02210 |
| Tanisha Carino |
officer: EVP & CCAO |
C/O ALEXION PHARMACEUTICALS, INC., 121 SEAPORT BOULEVARD, BOSTON MA 02210 |
| Anne-marie Law |
officer: EVP, Chief Experience Officer |
C/O BAXALTA INCORPORATED, 1200 LAKESIDE DRIVE, BANNOCKBURN IL 60015 |
| Brian Goff |
officer: EVP & Chief Commercial Officer |
C/O ALEXION PHARMACEUTICALS, INC, 100 COLLEGE STREET, NEW HAVEN CT 06510 |
| John J Orloff |
officer: EVP, Research & Development |
C/O BAXALTA INCORPORATED 1200 LAKESIDE DRIVE BANNOCKBURN IL 60015 |
| Indrani Lall Franchini |
officer: EVP, Chief Compliance Officer |
C/O ALEXION PHARMACEUTICALS, INC, 100 COLLEGE STREET, NEW HAVEN CT 06510 |
| John T Mollen |
director |
176 SOUTH STREET HOPKINTON MA 01748 |
| David R Brennan |
director |
C/O INSMED INCORPORATED, 10 FINDERNE AVENUE, BRIDGEWATER NJ 08807 |
| Baker Bros. Advisors (gp) Llc |
director |
860 WASHINGTON STREET, 3RD FLOOR, NEW YORK NY 10014 |
| L.p. 667, |
director |
860 WASHINGTON STREET, 3RD FLOOR, NEW YORK NY 10014 |
| Andreas Rummelt |
director |
C/O ALEXION PHARMACEUTICALS, INC. 352 KNOTTER DRIVE CHESHIRE CT 06410 |
| Francois Nader |
director |
550 HILLS DRIVE, BEDMINSTER NJ 07921 |
| Baker Brothers Life Sciences Lp |
director |
860 WASHINGTON STREET, 3RD FLOOR, NEW YORK NY 10014 |
| Deborah Dunsire |
director |
C/O ULTRAGENYX PHARMACEUTICAL INC., 60 LEVERONI COURT, NOVATO CA 94949 |
| Judith A Reinsdorf |
director |
C. R. BARD, INC., 730 CENTRAL AVENUE, MURRAY HILL NJ 07974 |
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