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Stock Analyst Update

Stay Away from United Therapeutics

The biotech stock may be cheap, but it's no time to buy in.

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What Happened?
The market destroyed United Therapeutics (UTHR) on Monday, sending the stock down about 63% in intraday trading. The sell-off was driven by Friday's innocuously titled press release: "United Therapeutics Plans Expected Transition to Commercial Operations." In the announcement, however, the company indicated that sales of its flagship Uniprost, which is expected to be approved by the Food and Drug Administration early in 2001, would probably total $10-$20 million in the product's first year on the market--much lower than earlier estimates. The release also said United's chief operating officer, James Crow, and its executive vice president for business development, Gilles Cloutier, would both be leaving early next year.

What it Means for Investors
Although we love bargains in the biotech sector, we believe that United Therapeutics has too many lingering questions to make it a compelling pick right now.

Emily Hall does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.