This Just In: Upgrades and Downgrades – Dendreon Corporation (DNDN) and More

With friends like these…
At the same time, Dendreon’s peers in the search for a cancer cure just get stronger and stronger. Onyx, arguably the weakest of the bunch (Dendreon excepted), is now profitable on a trailing-12-month basis. While expected to post a loss this year, analysts polled by S&P Capital IQ believe Onyx will turn a small profit in 2014, then grow rapidly in profitability from there on out. It’s also cash-rich and free cash flow positive in most years.

Amgen looks even better. Vastly profitable, the stock costs only 15.4 times earnings today, versus “infinity-times-earnings” for unprofitable Dendreon. Its debt levels are minimal for a biotech giant of its size, and Amgen throws off a ton of free cash every year (distributing some of it in a tidy 2.2% dividend yield).

As for giants Bristol-Myers and Johnson & Johnson, it probably goes without saying that both are profitable, and sizable producers of free cash and earnings alike. They also pay better dividends than anyone else mentioned above. Granted, at 20 times earnings (J&J) and 31 times (B-M), neither of these stocks looks particularly cheap. When considered in light of their anemic, mid-single-digit earnings growth rates, I’d be hard pressed to recommend investing in either one.

Fortunately for their shareholders, however, and unfortunately for Dendreon, a competitor’s stock doesn’t have to look attractive in order for said competitor to easily crush its rivals. That’s the fate Dendreon faces if it doesn’t get its act together soon, and begin delivering on its promises about Provenge.

The article This Just In: Upgrades and Downgrades originally appeared on Fool.com and is written by Rich Smith.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Dendreon and Johnson & Johnson.

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