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Biotech / Medical : Biotech Valuation

CRSP 52.51

+2.7%

Nov 14 9:30 AM EST

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To: IRWIN JAMES FRANKEL who wrote (6096)	4/5/2002 1:03:56 AM
From: John Metcalf	Read Replies (2) of 52153

"I'm sure some of you think I am missing it. So what is wrong with what I am saying?" Rick accused the big pharmas of lacking foresight and insight. Now, you say they don't even have hindsight-:) Perhaps some of them will take the acquisition plunge now, because erosion of revenues and earnings is unavoidable. They may as well have some prospects. Lilly, for example, is still selling for 7.35 times revs, and nearly 30 times earnings with Prozac becoming prosaic. SEPR is selling for 8.7 times rising earnings, so wouldn't be that dilutive (though it wouldn't go at the current quote). Merck has already taken a significant hit, and is cheap at 2.67 times sales and about 18 times earnings. Their stock is still worth $126 B, but it probably doesn't look like such great currency to them (any more). Even with today's haircut, BMY is still more richly valued than MRK (3.76 P/S and nearly 30 P/E). Most of the majors should buy something while they still can.

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