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Biotech / Medical : PFE (Pfizer) How high will it go?
PFE 25.37-0.3%9:47 AM EST
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To: zurdo who wrote (3912)7/4/1998 6:05:00 PM
From: DaiS  Read Replies (1) of 9523
 
To Zurdo, Perry. BigKNY3 and others on PFE thread.

I am long Vivus but would be happy to invest in PFE. I did ask on this thread about 6 weeks ago about the prospects of PFE investment and got rather unsatisfactory response. I was told that Pfizer is a great company for the future and shares would be a bargain buy at $90. Of course now I cannot take advantage of such a bargain - it would be great if I had bought last year.

The argument, which you have heard before from others many times, and which I also put on this thread, related to the P/E ratio. If Pfizer have $1Billion sales from viagra this year, on a profit margin of 0.2 and shares out of 1.3 billion gives contribution of viagra to EPS of 15 cents. Assuming a P/E multiple of 60 gives only a $9 contribution to the share price this year. I know that Pfizer has other great products in the pipeline but most analysts appear to accept that the main reason for the run up in the last 12 months is viagra. Even if viagra sales are $5Billion in a few years this would add only $45 dollars to share price 'senza' viagra. Of course the EPS growth rate of Pfizer seems excellent, but this could only justify a rapid advance in the share price if it was from a position where the P/E ratio was already low.

Please don't tell me that Vivus is a risky investment? Please don't tell me that Pfizer is a great company? Please tell me the flaws in my arguments and why I should invest now in Pfizer? I will be able to do that if you give me some good arguments. Thanks.

DaiS

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