MDS’s Restructuring Still Has a Way to Go

Article Excerpt

MDS INC. $21 (Toronto symbol MDS; SI Rating: Above average) soared for us since we first recommended it at $3.75 a share (adjusted for splits) in April 1995. But it has struggled in the past few years, as costly investments in emerging fields like protein research failed to live up to expectations. It also had to write off its equity investments in other Canadian medical companies, and recently sold its portfolio of stocks in roughly 80 biotech and health companies as part of a major restructuring. The company now has three core businesses: contact drug research; mass spectrometers that detect and measure foreign substances in blood and other fluids; and medical isotopes for cancer treatments. Sales of non-core assets in the past few months cut MDS’s revenue in its first fiscal quarter ended January 31, 2006 by 1.1%, to $365 million from $369 million a year earlier. But MDS would prefer to have investors focus on its continuing operations, where revenue actually rose…

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