Today’s news: Elliott Management urges Alexion Pharmaceuticals’ (ALXN) to pursue a sale of the company.
Alexion Pharmaceuticals (ALXN) has been approached by Elliott Management—the same investment company that successfully urged significant changes at Marathon Petroleum (MPC)—with the request that Alexion immediately seek the sale of the company. Elliott’s stance is that the stock is trading at a much lower share price than it deserves, and that by selling the company, shareholders would receive a much higher price per share than the current market price.
Obviously, I would concur that the share price is too low; hence, the stock holds a firm place in my undervalued stock portfolios.
I would caution investors not to worry that there’s anything wrong with the company, nor that Alexion’s management is doing a poor job. To that end, you may read Alexion’s press release from this morning, which itemizes all of the good and proactive decisions that management has been making in recent years. Management noted that they have not received any requests to be purchased by other companies, nor have they sought an opportunity to sell the company, and that they have no reason to do so.
The truth is, sometimes stocks are undervalued because they’re out of favor for innocuous reasons—market whims and such. Was Apple (AAPL) a different company a year ago when the share price was 140 vs. the Apple of today that commands a 269 share price? No. It was simply ignored by the market. The same holds true with Alexion.
It’s very likely that we’ll hear more on this topic in the coming days. After all, Elliott Management is somewhat of a bulldog. They’re not going to meekly take their marbles and go home. Additionally, there will be a certain faction of investors who will be more convinced of Alexion’s value now that Elliott Management has shone a spotlight on the situation. That could bring more buyers into the market, driving the share price upward.
I continue to believe ALXN is greatly undervalued. Buy ALXN now. Strong Buy.