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Has Spectrum Pharmaceuticals, Inc. (SPPI) Become the Perfect Stock? – Sagent Pharmaceuticals Inc (SGNT)

Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) has benefited greatly from its Fusilev cancer treatment, which has driven sales growth over the years. Even though a generic version of the drug has been available for a while now, shortages of generic leucovorin have given Fusilev a longer-than-expected period of relatively high sales. As recently as last month, the company had said that it expected revenue to keep rising.

Earlier this week, though, Spectrum said that those favorable conditions are set to change, and the stock plunged nearly 40% in response. Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) reduced its sales guidance for 2013 to a range of $160 million to $180 million, far below the $300 million that analysts were expecting. The company cited a drop in expected Fusilev sales by more than half as Sagent Pharmaceuticals Inc (NASDAQ:SGNT) has boosted production to alleviate the shortage. Sagent Pharmaceuticals Inc (NASDAQ:SGNT)’s shares have risen slightly, though not nearly as much as Spectrum’s stock has fallen.

Spectrum has other drugs, including non-Hodgkin’s lymphoma treatment Zevalin and T-cell lymphoma drug Folotyn, but their sales have been lackluster at best. But Spectrum still seems to believe that Fusilev is its best bet going forward and has been working hard to urge doctors not to shift to generic leucovorin.

For Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) to improve, it needs to avoid the sales collapse it now expects to see. The backward-looking numbers make the stock look near-perfect, but a revenue reversal will leave Spectrum much further from perfection next year than it is now.

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No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you’ll go a long way toward improving your investing prowess and learning how to separate out the best investments from the rest.

The article Has Spectrum Pharmaceuticals Become the Perfect Stock? originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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