The Roche buyout of Genetech has Cramer wondering who the next biotech takeover target will be.
Roche took advantage of the weak dollar to pick up DNA , much in the same way InBev bought Anheuser-Busch, and Carmer’s expecting that trend to continue. But there’s another reason biotech works right now: these names tend to outperform during a banks-led slowdown. That’s how it worked in 1990, and that’s how it’s playing out now.
So who’s the attractive name out there right now? Cramer said he likes Watson. Normally, he’d stay away from a company with so many generic products – 150 versus 27 branded – but it’s Watson’s pipeline that has Cramer’s attention.
Watson has 60 abbreviated new drug applications pending at the Food and Drug Administration. The pipeline’s worth $2 billion. Not bad for a company with a market cap of $3 billion.
Watson’s founder, chairman and CEO announced his retirement last year, and that’s usually a sign, Cramer said, of an impending takeover.
Wait for a bit more weakness in the share price if you’re going to buy. WPI is only $4 below its 52-week high. You might not have to wait too long, though. Merck’s continuing Vytorin problems might offer you just the entry point you need.
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