Analyst Gets Owned at his own Conference
How normal is this? lol I just read this and a lot of people get calls wrong, but for this one to get called out and not much of a response makes me wonder what's going on behind the scenes.
For a good laugh.
The head of Vertex Pharmaceuticals Inc. (VRTX) used an appearance Tuesday at an investment-bank conference--normally a staid, cordial affair--to take to task one of his company's biggest critics, who also happens to work for the host bank.
Vertex Chief Executive Matthew Emmens told Morgan Stanley (MS) analyst David Friedman that he didn't think Friedman understood the drug maker in an exchange in front of a room full of investors at the investment bank's Global Healthcare Conference in New York.
Friedman rates Vertex shares "underweight," according to a Morgan Stanley website. He has been skeptical about whether Vertex's new hepatitis C drug, Incivek, will meet high sales expectations from others on Wall Street.
But Vertex shares are up more than 40% year-to-date, trading recently at $50.21, buoyed by early signs that Incivek has been a brisk seller and is outperforming a competing new drug from Merck & Co. (MRK), Victrelis.
At the conference, where Friedman introduced health-care executives and asked them questions, Emmens said Incivek's launch has been successful, and Vertex plans to file for regulatory approval of a cystic-fibrosis drug soon.
"I think we've done a little better than you thought we would," Emmens said to Friedman.
"I absolutely agree," Friedman responded. But Emmens, a drug-industry veteran who previously worked at Shire PLC (SHPGY) and Merck, was just getting started.
"Do you understand this company? I don't think so," Emmens said in remarks played over the Internet. "By what I read, I don't think you understand our company. I'm going to do the best I can to prove you wrong again and again, because it's been fun. But when does it stop, you know?"
Friedman said he is "trying to do the work that we see." To which Emmens replied: "OK. You do your job, we'll do ours. Keep it up."
Emmens didn't raise his voice, and even sounded jovial at times, but his words didn't leave much doubt about his view of Friedman's research. Friedman quickly moved on to questions about Vertex's business.
At the end of the presentation, Friedman thanked Emmens for appearing, and the chief executive reciprocated.
Vertex's road to Incivek's launch was a long one, coming 15 years after the company made a splash by publishing key research on an element of the hepatitis C virus that became the target for Incivek. The company's past drug-research efforts also were the subject of a 1995 book titled "The Billion Dollar Molecule: One Company's Quest for the Perfect Drug."
Morgan Stanley has gotten banking business from Vertex in the past, including co-managing a 2009 stock offering.
Friedman couldn't be reached. A Morgan Stanley spokeswoman declined to comment.
Hahahaha wao, I feel bad for Friedman. Anyway, time and the market reaction would be the best answer
As for David Friedman, am I the only one who thinks this will make one hell of a story for the bschool app? =)) (IF he is right)
that guy is most likely an MD...
Yah, I keep forgetting that it's unlikely that they would let a newly minted analyst to give the presentation. My bad. Looked the guy up on Linkedin, though he's not a MD, he's an associate who already went to business school (HBS, no less). And as far as credentials go, he's pretty legit to cover pharmaceutical industry too (went to ugrad at Duke, general surgery resident at the Massachusetts General Hospital)
Don't feel bad for Friedman kiddies. Jim Chanos was thought to be suffering from fuckfaceitis when he went about questioning Enron's numbers. I don't seem to hear any glib shit coming from Andy Fastow, Jeff Skilling or the grave of Ken Lay. The job of an analyst is to look at all possible angles, not just the rosy pink shit. If Friedman isn't simply rubber stamping a drug company and it's newest miracle product it shows he's not in their pocket. This is a good thing for everyone involved, as for getting pwn3d by a CEO...comes with the territory.
It's always nice to see someone sticking it to "the man" even if he himself works for "the man." If you catch my drift.
only time can tell
That was a dick move by management.
Yeah I guess it's one of those things you won't see until later...but I think this analyst a year ago, thought that their drug would have huge issues in the beginning and has been a bear on alot of their pipeline which has done well so far. I think it's nice to see people dismiss pleasantries and go at it!
"Owned" is definitely not how I would characterize this exchange. An Analyst only gets owned if his recommendation is wrong, not if the CEO disagrees with his Sell rating. "Called out" would perhaps be a better way to put it.
Have you ever in the history of the world met a CEO that is happy with the analyst who slaps a Sell rating on his company? The answer is no. They are always pissed, and have even gone as far as to demand the sacking of said analyst or the company will withhold all future banking business.
In a nutshell, this story is fairly ridiculous.
Good point. Management complains often over Sell and Hold ratings.
Well to be honest - the analyst was wrong. I just did some reading and he thought the launch of the drug would be dismal and well...the drug has been doing really well. He even admitted to being wrong. It's fine..maybe the call will work out longer term although that wasn't the original thesis.
Midas has it right, the first thing I thought when reading that was Enron. How petty is that for the CEO to call out an analyst like that on stage with the sole intention of humiliating him? Either the guy is an asshole or he is acting out of aggression b/c he is hiding something.
"show me a man who has never made a mistake, and i'll show you a man who has never made a decision" ...
At the same time, you have to look at it from the CEO's perspective. This analyst is far removed from the company and keeps shitting on the work and process that Vertex does in developing drugs. Many in the industry were critical of the designer molecule model used by Vertex but now they are coming out with a drug for Hepatitis this year, one for Cystic Fibrosis the next, and another the year after that. I can see why the CEO may be annoyed by the notion that some shithead 20 something in a big Wall Street skyscraper is criticizing his business. I'm not saying what the CEO did was right, but I understand.
someone please correct me (and forgive my ignorance) but in equity research, aren't the titles different than in IB? like an entry-level ER guy starts off as an "associate" and only after several years of good work he is promoted to "analyst". i did a quick google search for David Friedman at Morgan Stanley, and he goes by "David Friedman, M.D." on research reports. i have a feeling this guy isn't just some 20-something smartass straight out of college.
Does anyone else see it as a little pathetic that a CEO would stoop to take a jab at an analyst? (and IMHO lose his cool/composure)
Yes, ER roles are 'backwards'. In ER, Analyst is a higher-up title.
Pssh, that's nothing. Back in '08 the CEO of Union Properties in Dubai spent about half the conference call railing on how retarded the Morgan Stanley analyst who downgraded his stock was and how resilient and robust Dubai property was. Analyst didn't stick around long..
http://gulfnews.com/business/property/union-properties-damaged-by-morga…
Share price fell from 5 dirhams to 0.35 dirhams today. Ouch..
This is always easy in hindsight.
Theoretically, the analyst could even be right. Chance of a successful launch could have been 1% versus 99% of failure, meaning buying the stock would not be a good idea from a risk return perspective.
The fact that incivek was successful after the fact does not mean that it was a good buy at the time.
I mean this is just like Whitney Tilson beating the drum against Reed Hastings, telling him to cover his Netflix short. And well we see what an absolute disaster NFLX has become. I would be extremely skeptical of a CEO coming at an analyst like this. Something smells fishy.
This reminds me of one of my favorite posts from one of my favorite blogs circa 2007:
http://longorshortcapital.com/how-to-destroy-an-analyst-by-pot.htm
I am aware that and Analyst in ER is higher than an associate. I didn't realize the guy had an MD, but the age (he's prob 30 something) isn't the issue. I still can see how people could be pissed some dude in an office who doesn't work in the industry (per se) / doesn't know the inner workings of the company is telling them how to run their company, and is criticizing the direction, etc.
The fact that company executives would care this much about what a Wall St analyst says about them makes me think that the analyst is probably right about them.
I thought that analysts received worst treatment at work?
Dude should swallow his pride and we all need to move on ...
He was humiliated, the CEO is classless, blah blah blah, the analyst is not an angel too
Fact is, that CEO's presentation at the conference is putting money in the analyst's pocket. There are plenty of banks the company can go to for coverage.
Does this guy just doubt the company? ie frauds or is he just writing it off as some fairy tale bull story?
Quia rem totam qui perferendis. Aut laborum accusantium porro ipsam. Odit et officia inventore in assumenda quia.
Alias quia recusandae autem exercitationem asperiores ratione fugit. Incidunt minus vel corporis est voluptatem quia. Temporibus odio ut nam asperiores tenetur harum soluta qui. Repudiandae dolor veritatis quia sit.
Magni labore eius nihil earum vel cumque odit est. Saepe nemo sunt aut praesentium soluta iste ea. Eum et nisi odit voluptatem nobis eligendi.
Voluptatem voluptas sit tempora adipisci qui perferendis. Sed natus dolores cum qui. Id mollitia quia quia tenetur ad. Magnam inventore libero officia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Voluptatem accusamus a nulla quia dolorem. Rerum assumenda qui totam ipsum vel eligendi. Illo facilis beatae quibusdam quia similique quis alias.