GSK is in a better position than Pfizer in terms of pipeline. They have an immediate revenue problem because of the collapse in Avandia sales, and the precipitous drop of the pound against the USD will compress earnings even more. The dividend payment is denominated in pounds, so the yield based on historic dividend levels won't stand. Also, debt levels appear to be high, roughly 50% of market cap.
The company offset its loss of patent protection for Wellbutrin XL and other products with four or five launches in 2008. And they have probably the best pipeline in the industry, with 40-50 compounds in Phase III trials. These will probably begin to generate impressive growth sometime in 2011, so maybe the time to look at the company is later this year or early next. I might pick up some if I can get it in the high 20s.
I agree with your selection of JNJ. I hold it, and some LLY out of the big pharma.
I hadn't thought about NVO much until EKS mentioned it here recently. I consider the company to be among the best managed in the industry, perhaps even the best managed of the big pharma, but had always considered the stock valuation to be rich. It looks more attractive in terms of valuation than I've ever seen it. So, I'm looking at it.
I'm curious how you value a stock. Do you use the same method for every industry, or different methods depending on the industry? |
