it was really a comment about the entire biotech sector
Peter, it is certainly appropriate to be cautious at all times but the "industry" looks to me like it has been in a rather orderly correction for the past 2 years. bigcharts.marketwatch.com
I don't see many signs of a "bubble" here in the classic sense of the term. To the contrary, the market seems to be dishing out quite severe punishment to companies that appear to be failing to deliver on promises, even to the point of temporarily valuing them at cash, as Cary correctly pointed out above.
[BTW, his question to you about enterprise valuation, I thought, was extremely provocative, and I look forward to your response. How quickly does all PCLN's cash get burned and how likely that the company might be acquired? Is it possible there might be a reasonable middle ground between Bonanza and Junk Science, that seem to define the mood swings of biotech speculators? I have "known" Cary for several years and have no doubt that his contributions to this thread will be significant.]
the thing to marvel at might well be the low market caps of the automakers rather than the high market cap of AMGN.
But Peter, the expected growth of the auto industry over the next 5 years is 6.21% and the PEG 5.79 biz.yahoo.com
Compare biotech industry where expected growth is 14.98% and PEG is 2.12. Note that for AMGN the expected growth is 19.0% and PEG is 2.85. biz.yahoo.com
So where is the bubble: biotech or auto sector? (I would have to note parenthetically that Autozone (AZO) happens to be the second biggest % gainer in the S&P 500 this year, mostly a reflection on the high number of clunkers on the road. Who says you can't make money in retail? <g>)
Of course, one must always look at expected 5 year growth numbers with a very big grain of sand. We can only wonder what Bloget marked up for PCLN's expected 5 year growth back in tulip season when the stock briefly skimmed $168 (much to Delta's delight). Certainly, however, its PEG was negative back then, as was its PE. Interestingly, analysts currently expect PCLN to cross the threshold of profitability next quarter, though most investors remain skeptical. Time to look at those calls? <g>
Sam |
