zurdo, this message from the Yahoo Merck board provides a short term and long term perspective (including price movement) of Merck and Pfizer. The poster is VikingRapier, subject MRK/PFE (message # is 5757 but it may change). It is well-written and unbiased. Have a look:-
messages.yahoo.com@m2.yahoo.com
All these pale in comparison to the really large effect: general market conditions. PFE has a high p/e. This makes people more likely to sell in a down moving market. More importantly, people are simply selling because of reasons unrelated to the company as such: they want to take the profits for other opportunities, or they need to cover margin, or have other bills and they take the profits - and PFE made them a lot of money. We see this in the equal movements of WLA and PFE (both high p/e). MRK on the other hand has a relatively lower p/e, good institutional investment inertia, and so is not as likely to be sold off for the reasons outlined for PFE or WLA.
Bottom line: IMHO, PFE is not likely to explode up for the rest of 98. I think it will run up for 3Q earnings, but then sell off for the October market tanking. MRK will continue muddling through for the rest of this year.
Yet, if your perspective is longer term (2-5 years) PFE is a good place to keep putting your money in. The fact that it is a bargain and may remain so for another 6 months, is a beautiful opportunity to keep buying in at low prices (as Buffet said, if you are a regular consumer of beef, you want the price of beef to stay low). Then, PFE will take off again, hugely. MRK is likely to keep muddling for longer term WITHOUT exploding , unless Vioxx and Substance P not only compensate for the Zocor and patent issues, but match PFE pipeline introductions. My money is on PFE. I believe the long term return on investment will be much greater with PFE than MRK. |
