- By Barry Cohen

In May 2019, I reported that analysts rated the shares of Danish pharmaceutical company H. Lundbeck A/S (HLUKF) a hold. Oops. Investors who heeded that advice have seen the value of their shares drop by more than 25% since that time. At about $31, the company's stock is where it was five years ago.

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• HLUKF 15-Year Financial Data

• The intrinsic value of HLUKF

• Peter Lynch Chart of HLUKF

What happened? For one, the Covid-19 lockdown. Second, the failure of two drugs the company acquired.

Vyept is one of Lundbeck's most valuable medications, with a net present value of more than $1 billion, as calculated from EvaluatePharma's consensus of sell-side analysts. Lundbeck acquired the drug as part of the September 2019 purchase of Alder for $2 billion. The deal was aimed at expanding Lundbeck's offering to treat brain diseases.

But here's the problem: The migraine prevention treatment is administered intravenously, a procedure that must be performed in a doctor's office and, as we know, the pandemic has limited in-person visits to all but the most essential services. Bad luck. As a result, sell-side analysts have lowered their expectations for the drug, pegging it to generate revenue of $41 million this year and $124 million in 2021. However, Leerink thinks sales are going to be far lower: $6 million this year and $78 million next year.

If that situation isn't bad enough, Lundbeck recently discontinued clinical trials of two drugs it was banking on heavily, one for Tourette's disease and another for Parkinson's. The Parkinson's treatment was acquired in March 2018 for $100 million, the amount the company recently wrote off and led it to cut earnings guidance for 2020.

So where does the company turn? It appears its best bet is more deals, which are an option given Lundbeck is profitable. At this writing, however, the rumor mill is quiet.

For the first nine months of the year, Lundbeck's sales climbed 6% while reported earnings per share dropped by more than half from the same period a year earlier.

Analysts still assign the company's shares a hold, with a median target price of just over $33.

Disclosure: The author has no position in Lundbeck.

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This article first appeared on GuruFocus.