From Briefing.com
Schering-Plough Corp. (SGP) 45 3/16: This major pharmaceutical concern posted Q4 results that were slightly better than anticipated and that should not be a drag on the stock. However, 1999 was not a very good year for drug stocks and the tone has not improved much in recent weeks as pharmaceutical companies have lost much of their appeal with investors. Still this is a group that continues to grow both top and bottom lines by 15% or more and there seems to be little evidence that this growth will slow anytime soon. Nonetheless, for the past year, shares in this sector have traded in a very choppy fashion even though companies have continued to deliver steady growth numbers. In the latest quarter, SGP earned $0.34 per share, a penny better than the First Call mean, and 21% above year-ago profit of $0.28 per share. Sales rose 11.9% to $2.3 billion as the company was helped by an increase of 17% in international sales. SGP enjoyed solid growth of its allergy/respiratory and anti-infective/anticancer products as well as from its animal health products. At the same time, Schering-Plough said that 2000 should be another year in which the company should deliver solid growth, as it has for the past 14 years. With a very solid new drug pipeline in place, there seems to be little reason to suspect otherwise as the company is currently projected to earn $1.64 per share in 2000, an increase of 16.3%. Yet, during the past couple of months, the stock has struggled, falling from a recent high of 56 1/8 as investors have turned away from pharmaceutical stocks in general on the fears that the Administration may push through a new healthcare plan that could adversely affect how drug companies operate. While the chances of such a plan being approved by Congress remain slim, in an election year, anything is possible, especially campaign promises, which are likely to keep pressure on drug stocks over the near-term. Nonetheless, for longer-term investors, this is a stock and sector that should be revisited. - RN |
