Looks like Barrons is up to its old tricks. I have retyped select sections of the Barrons cover story since Barrons has somewhow blocked my ability to copy it.
Please keep in mid that these, so called money managers, were telling Barrons readers a month or two ago to short Ascend Communications (ASND) which promptly went from low 20s to the low $40s. I get the feeling that many of these money managers failed to get in on PFE early in the Viagra craze and were left with their pants down. Now they are actively trying to bring it down a notch so they can get PFE cheap. How on earth can these idiots whose background and performance are not clear state that Coke or Yahoo are any where comparable to Pfizer? These guys are basing their entire judgement on P/Es which fails to take into accouint critical issues such as proprietary technology. Anyone can make a razor or build a search engine.
As you read the article you'll see one manager imply that Merck is a better investment than PFE. I bet this was written before Merck decided to practically give away it's anticholestrol drug to the hospitals. I wonder how the manager feels now and how will it affect earnings. What message is Merck sending to its investors when the only way to possibly gain market share is to decrease the price because the drug their drug is so apparently inferior to WLA's Lipitor.
I think the article totally contradicts itself in the last paragraph when it states that a high P/E will not drive these money managers out of the market. I say these guys should keep their opinions to themselves since they are clearly going to ignore their own opinions.
Enough said.
Good luck.
Perry
P.S. please ignore spelling mistakes.
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Pieces of Barrons article dated May 4th/98.
"Far more often, they're in agreement about which stocks are most overvalued. Coke as noted, again topped the rankings, with an astonishing 59 votes, followed by Microsoft, with 42, and Yahoo with 26. Gilette and Pfizer also took a lot of heat from this group, new-product hype, the portfolio managers say, has levitated both to unsustainable, if not unreasonable, levels.
The managers haven't had much luck panning Gilette before, although the shares at 117, are down a few points from a high of 125. Still, the stock is changing hands at a more-than-generous 34 times estimated earnings. The company has high hopes for its new Mach3 razor, but the Big Money managers fret that Gilette could be ripe for a major haircut....(I won't type the rest. It's more on Gilette and it's 70 billion dollar market cap)"
"Can the same be said of Pfizer, whose Viagra impotence drug, though two weeks young, already has made the cover of Time? Some of our managers think so, each time they contemplate the company's P/E of 46. Notwithstanding Viagra's evident appeal, notes Donald Gher, Pfizer is selling for roughly the same price as Merck. Yet Merck, he wagers, will earn almost twice as much this year. "Either Merck is extremely undervalued or Pfizer is overvalued," he concludes. "When investors came out of energy stocks a few months ago, it was 'look ou below.' "Pfizer could end up like that."
"As the Dow once more closes in on the record high it set in mid-April, skeptics are waiting for a fall. After all, this bull has run so far, so fast. But it will take more than high P/Es to drive the Big Money managers out of this market. As long as interest rats and inflation remainf benign, and U.S. companies keep posting profits, our managers plan to stick around. And why not? They're expecting a most enjoyable ride" |
