The stock of radiopharmaceutical specialist Lantheus Holdings (LNTH 8.84%) was a standout in the healthcare sector on Hump Day. The company saw its share price improve by almost 9% at market close, thanks to news of a shareholder-pleasing move. That gain far outpaced the S&P 500 index, which ended up closing flat on the day.
A $250 million move
Well before market open, Lantheus announced the launch of a $250 million share repurchase program. The initiative will be in force for one year. As is typical for stock buybacks, this one will be conducted from time to time through open market purchases at management’s discretion.
Lantheus isn’t generally known as a buyer of its own stock, which is one reason for the upbeat — and likely somewhat surprised — investor reaction. Over the trailing five years, it has only enacted repurchases in 2022, when it spent a comparatively modest $75 million on the activity.
In the press release trumpeting the new move, the specialized pharmaceutical company quoted CEO Brian Markison as saying, “With our strong financial position and the Board’s commitment to shareholder value, this share repurchase program reflects our confidence in Lantheus’ continued radiopharmaceuticals leadership and ability to drive long-term, sustainable growth.”
Markison added that the buybacks would commence this quarter. He did not get more specific.
Only one indicator among many
While Lantheus’ news is certainly encouraging, no investor should lose sight of the fact that share repurchases do not a company make. Yes, they’re a sign that a business is in good health. However, no stock-watcher should rely only on its level of buybacks. Fundamentals matter much more. Happily, in Lantheus’ case, the company has been doing rather well lately, posting top-line growth and bottom-line profitability.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
