IVAX Corporation (NASDAQ:IVX) is a multinational firm engaged in the research, development, manufacture and marketing of pharmaceutical products. The company makes and/or markets several brand name pharmaceutical products and a variety of brand equivalent and over-the-counter pharmaceutical products, primarily in the United States, Europe and Latin America, and through subsidiaries around the globe. Ivax specializes in the development, manufacture and marketing of respiratory drugs, primarily for asthma, delivered by metered-dose and dry-powder inhalers.
Shares of IVX soared last week after the company said quarterly earnings more than doubled as sales rose on exclusive marketing rights to some key generic drugs. Revenue jumped 28% to a record high of $509 million, from $399 million a year earlier as the company capitalized on exclusive marketing rights to sell cheaper versions of diabetes drugs and Pfizer's anti-seizure pill Neurontin. Friedman Billings and Standard & Poor's Equity Research quickly upgraded the issue, with the latter commenting that Ivax has the "second-strongest pipeline in the industry, with potential generics of Flonase, Zyprexa, Lexapro, Zoloft and Zocor."
While the S&P analysts may be a bit optimistic with a $20 price target, we do believe the issue is comfortable in the $18-19 range and traders who agree with that assessment should consider this position. We recommend targeting a higher (bid) price initially to take advantage of any near-term consolidation in the underlying issue.
Fundamentals Chart Earnings Dates Analyst Ratings
Suggested (Bullish) Option Position:
Sell Put APR 17.50 IVX-PW
Current Bid = $0.25 Open Interest = 1071
Potential Profit (5 contracts) = $125
Initial Margin (5 contracts) = $3,110
Return on Investment (max) = 4.7%
Cost Basis in Stock = $17.25
Days to Expiration = 26