Recently, Alexion Pharmaceuticals, Inc. (ALXN) authorized a two-for-one stock split. The action is subject to shareholders clearing the change in Alexion’s certificate of incorporation to double the number of authorized shares to 290 million. A decision regarding the matter is expected to be reached on May 11, 2011, at the annual meeting of the shareholders of Alexion.

If the amendment is approved then the additional shares will be distributed to the shareholders, as on record on May 2, 2011. The distribution is expected to be made by May 20, 2011. Following the stock split, every shareholder at Alexion will get an additional share for each share he/she currently holds.

Stock split would definitely enhance shareholders’ confidence. Apart from the announcement regarding stock split, Alexion also announced its inclusion into the NASDAQ-100 index from April 4, 2011.

The index comprises the 100 largest domestic and international non-financial firms listed on the NASDAQ stock exchange. The composition of the index is determined by market capitalization.

Our Take & Recommendation

Currently, we have a Neutral stance on Alexion which is supported by a Zacks# 3 Rank (short-term Hold recommendation). We believe that Alexion’s future is tied to Soliris. Soliris was approved by the US Food and Drug Administration (FDA) in 2007. Soliris is marketed for treating patients suffering from paroxysmal nocturnal hemoglobinuria (PNH), a rare genetic blood disorder.

Alexion is also seeking to expand Soliris’ label. Approval of the drug for any additional indication will further boost the company’s top line. However, we remain concerned about Alexion’s dependence on a single product for growth.

 
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