SBH -- a short selling recommendation
Smithkline Beecham (SBH @US$86 3/8, listed on NYSE)
52 wk high: $88 3/4
52 wk low: $49 1/4
Yield: 2 %
Price to tailing 12-month earnings: 32x
Short selling recommendation
Smithkline Beecham (SBH) is expected to have a declining
rate of earnings growth starting in this year's third
and fourth quarters. Wall Street concensus expects the
company's per share earnings growth rate for next year
to slow down to 16% from this year's average quarterly
growth rate of 43%.
Moreover, because of the company's high debt load (44%)
in its capital structure, and the shares are selling
near the high end of the 5-year range of
price-to-earnings (15 - 35x) and price-to-sales ratios
(1.4 - 3.3x), we recommend SBH as a short selling
candidate.
SBH, one of the largest drug companies in the world, and
no. 3 in the over-the-counter product sales, makes
prescription drugs such as Angosertin, an antibiotic
(its #1 product); Taganet, an ulcer remedy; Havrix, a
hypatitis A vacine; and Pexil, an anti-depressant. It
also makes OTC medication and personal products.
Pharmaceuticals account for about 60% of the company's
sales. For more fundamental and technical information on
SBH, please click on the following URL:
wsrn.com
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