浏览： 日期：20200113
Introduction
The Sirtex company is a medical company which is based on Australia and provide a radioactive treatment for inoperable liver cancer. And the primary objective of this company is about research, development and commercialization. Sirtex is devoted to research and develop effective medicine or treatments which can be used for liver cancer with novel small particle technology. Besides, Sirtex also is innovative or creative at dealing with liver cancer. Since the liver tumor can not be easily removed from the body of human, so Sirtex company develop a kind of technology which can be used to target and irradiate internally and directly to the humor. This new kind of technology is called selective internal radiation therapy. Its main product is SIRSpheres. And the main operation of Sirtex are carried out in North America, Europe and Asia Pacific.
As a medicine manufacturing company, Sirtex takes on principal business activities such as manufacturing medical product, distribution of new innovative technology of research and development to the world and conducting the trials of liver cancer which can lead to commercialization of liver cancer treatments.
And for its revenue, Sirtex accumulates its revenue from business activities which could be services rendering and goods selling to the customers. And its main business activities is selling the doses to the customers who have liver cancer. From its 2011 annual report, the Sirtex sold 4977 doses through 510 hospital in the world which generates .3 million in 2011 for the Sirtex.
Performance of Sirtex
As for the performance of Sirtex, earning per share ( EPS ) and price earning ratio ( PE) should be considered.
Regarding earnings per shares, its formula is:
EPS = ( net income  dividends on preferred stock) / average outstanding shares
For Sirtex, the given data is :
Earning per share : EPS 
2011 
Profit from continuing operations 
$ 11479000000 
Weighted average number of shares used in the calculation of basic earnings per share 
55768136 
EPS 
$ 20.6 per share 
Given above data, the EPS can be calculated as .6 per share.
And as for price earnings ratio ( PE). Its calculation formula should be :
PE = market price of the share / earning per share(EPS)
Following above formula and given data, the PE ratio could be :
PE ratio 

Market price for the share in 2011 
.48 
Earning per share in 2011 
$ 20.6 
PE ratio 
0.217 
From the PE ratio, the conclusion could be derived that the stock price of Sirtex must be undervalued because the earnings per share of the company are larger than the stock market price.
And above picture is the comparison between stock price of the Sirtex and ASX 200. Since ASX 200 index is the standard used index in Australia, so comparison with ASX 200 could point out some properties for the Sirtex. From above picture, the time zone is from October 9^{th} of 2011 to October 9^{th}of 2012 and it implies that the line of fluctuation of stock price of the company is similar to the ASX 200 before August in 2012. After that time, the ASX 200 apparently goes up while the stock price of Sirtex keeps increasing. And integrated with above EPS and PE ratio, the undervalue of stock price of the Sirtex could be recognized by public and the stock price would increase. Apart from this reason, the profitability of the Sirtex could explain the increase of the stock price.
GICS is a global industry classification standard which can be used by the global financial community. Because the Sirtex takes on healthcare and biotechnology, so this company is classified as health care in GICS sectors. And above picture also implies that the stock price of Sirtex goes similarities with the total sector of GICS before August in 2012. And after that time, the stock price of the company obviously climbed up. The reason of rise of the stock price may be the good profitability of the company or the altered expectation of the public to the Sirtex.
Based on above calculation of EPS, PE ratio and comparison with ASX 200 and GICS, the performance of the company moves to a good direction and the stock price of the company will go up continue.
Expected return of the stock
Currently, the stock has a goup tendency. To verify the expectation, the expected return of the stock should be carried out.
The daily data is selected from the Yahoo finance website in a timing zone of October 9^{th} in 2011 to October 9^{th} in 2012. Also, to calculate the expected return of the stock, the market daily price should be required so that the ASX 200 prices are selected from Yahoo finance website too.
Firstly, to make a profound understanding of the Sirtex stock, the mean return, standard deviation, variance and holding period return of the stock should be calculated.
Given the daily price of the stock, formula of the daily return of the stock should be:
R_{t }= ( P_{t } P_{t1 }) / P_{t1}
With this formula, the daily price of the stock and market could be transformed to daily return.
And formula of mean return, standard deviation, variance and holding period return could be:
Mean return: R _{M }= ( R_{1 }+ R_{2 }+ ....+ R_{n }) / n, where n is number of days.
Variance: V = [( R_{1 } R _{M })^{2 }+ ( R_{2 } R _{M })^{2 }+ .....+ ( R_{n } R _{M })^{2 }] / n
Standard deviation σ= the square root of Variance
Holding period return = ( 1+ R_{1 }) * (1+ R_{2 }) *....* ( 1+ R_{n })  1
Based on the formula of mean return, standard deviation, variance and holding period return, the results could be generated from the Excel:
Items 
Sirtex stock 
Market : SAX 200 
Mean return: R _{M} 
0.003357302 
0.000297996 
Variance : V 
0.000423704 
8.73184E05 
Standard deviation: σ 
0.02058407 
0.00934443 
Holding period return 
1.194690265 
0.065687388 
Covariance 
0.0000053527122665 
From above diagram, it implies that the standard deviation of Sirtex stock is larger than which of market. And this point shows that the Sirtex stock fluctuates much more than the market.
To calculate the expected return using the CAPM model, the beta of the stock should be required:
So beta = 0.0613
To calculate the expected return of the stock, CAPM model should be used：
R_{i } = β*（R_{ASX } R_{f }) + R_{f}
At October 9^{th} in 2012, the R_{ASX }is 0.5221% , the R_{f} is 0.06% using treasury bond interest rate, so R_{i }is 0.088% which is the expected return for the October 10^{th} in 2012.
Impact of announcement on company’s securities prices
Between July 2010 and July 2011, some public or non public announcements could have significant impact on the share prices.
For example, the company issued the halfyear financial report ended 31 July in 2011 which indicates that the total revenue were .8 million, up 8.1% from million in the six months to 31 July 2011. After this revenue and sales situation announcement, the share price would be up depending on the positive effect resulted from the announcement.
And for dividend announcement, for financial year ended 30 June 2011, the Sirtex announced that the dividend amount per security would be 7%. The effective measure used to appraise this announcement would be the cumulative abnormal returns which measures the investors’ total return along a period beginning from before the announcement of dividend to after the dividend announcement day. From this perspective, the CAR increased on the day of the dividend announcement and dropped after dividend announcement. It implies that the investors always overreacted to the dividend announcement which is consistent with the dividend irrelevance hypothesis of Modigliani and Miller(1961).
Investment advice
Based onabove analysis of the stock return of the Sirtex, it is advised to make a buy hold strategy since the stock price is undervalued and has potential capability to rise.
Reference
Miller, M. H., and Modigliani, F., “Dividend Policy, Growth and The Valuation of
Shares”, The Journal of Business, Vol. 34, 1961, p: 411433.