One of the toughest decisions for an investor is making the call to throw in the towel on a stock. In this Motley Fool Live video recorded on June 30, 2021, Motley Fool contributors Keith Speights and Brian Orelli answer viewers’ questions about whether or not to hold out hope for two underperforming healthcare stocks.
Keith Speights: Another question that is floating to the top is from John, “Any thoughts on bluebird bio (NASDAQ:BLUE)?” Ticker there is BLUE, B-L-U-E. “It has been hammered, and as an owner, I’m wondering if I should hold out hope.” Any thoughts on Bluebird?
Brian Orelli: I don’t know whether its stock has recovered. I haven’t looked at it recently and I’m not an owner, but I know that in the news, the company has definitely recovered. I think they had some side effect issues that turned out they were worried that their treatment was causing cancer, and that doesn’t seem to be the case, and so I think that it’s recovered.
I think the biggest issue I think is that the delays for bluebird bio have allowed other companies, especially CRISPR Therapeutics, to catch up for beta thalassemia and sickle cell disease. And so while it had quite a bit of a lead on the CRISPR Therapeutics — CRISPR Therapeutics and other companies — I think it’s lead has waned substantially due to manufacturing issues and so that’s a concern when you figure that there’s only a limited number of patients with beta thalassemia and sickle cell disease.
Speights: Retired20 says, “I have OGN,” that’s Organon (NYSE:OGN), “as a result of the Merck (NYSE:MRK) spinoff, it has done poorly. Thoughts?” This is a story I haven’t followed very closely. Brian, have you watched this spinoff very much?
Orelli: I haven’t looked at the valuation of Organon, so I can’t really talk to whether it’s done poorly or not and whether it will recover or not. I think it’s not something that would be very interesting to me.
If I was a Merck shareholder, I probably would just sold it on the first day because I think that it’s basically the has-beens of Merck. They spun it off to try to have the rest of Merck grow quicker, so I think it’s probably one of those things where hopefully they maybe they pay a dividend and that’s the type of company that you are investing in is a slow grower that they can pay you a steady dividend and that’s not your thing, then maybe you want to sell it.
I mean, we can offer individual advice, but personally, that’s not the type of company that I’m interested in investing in. I’m interested in investing in high-growth companies and I don’t think that Organon has the drugs in its current marketed drugs and in its pipeline that are going to make it a high-growth company.
Speights: This is one of those deals that companies make to boost growth for the primary company. This was probably done mainly for Merck’s growth to look better, don’t you think?
Orelli: Exactly. Yeah. I mean, my guess is probably they saddled them with some debt probably, which is going to make it even harder for them to be a high-growth company.
I honestly haven’t really looked at it that. I’ve read the headline news, but I haven’t looked at it very closely, and so I can’t give you much of opinion on whether you should hold or not. Even if I could give you individual advice, I can’t give you my opinion of the company very much because I haven’t looked at the nitty-gritty details of the company.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.