The Peabody Report: August 16, 1998
The Peabody Report is intended to foster conversation on the PFEr Board.
Comments are welcome and encouraged.
Invest only after conducting your own research.
Have PFun!
BigKNY3
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Peabody Peak/Valley Status
Peabody Peaks and Valleys since 1/90 (Updated 8/07/98)
Chart of Peabody Peaks and Valleys with Moving Averages dailystocks.net
Useful PFEr Links
-3 year PFE chart versus the Dow growth. control.bigcharts.com
The Market Environment
-Briefing.com briefing.com
Peabody Model Trend Prediction
Based on historical PFE patterns, the Peabody Model predicts the following trend direction:
A new pending Peabody Valley (98.50) was reached last Tuesday. With an expected change in direction of the general market, Da Model predicts the PFE trend will reverse and will head to a new Peabody Peak of 117.19 by August 28, 1998.
Commentary
The current Peabody Peak to Valley decline of 18.3% is strikingly similar to last August's decline of 21.1%. Last year's decline also reflected the strong influence of a declining general market in generating PFE profit-sharing.
Since it is based primarily on historical trends and Mr. Peabody "gut-feels", the Peabody Model should always be placed in context of the market environments and anticipated news. As evidenced by the mythical Peabody Portfolio (see section below), the Peabody Model works particularly well for PFE investors with a "buy, hold, and buy more at the Valley" investing strategy.
New or pfuture PFErs could consider investing 50% immediately and investing the
remainder at near Peabody Valleys.
......................................PFE.........................% Chg from...............# Days
.....................................Date.........Price.......Last Price (8/14/98)......From Today
Last Peabody Peak:..... 7/14/98......120.56..........+19.1% ...................-33
Last Peabody Valley*: .. 8/11/98 ......98.50.......... -2.7% ......................-5
* Pending
Forecasted Next Peak.....8/28/98....117.19..........+15.8%................ 12
Peak Strike Price............................108.35............+7.1 %
Forecasted Next Valley................... 96.13.............-5.0%..................
(If Model is Wrong)
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Peabody Short-term PForecasts
Peabody Short-Term PForecast (8/09/98): PFE: 103.50, DJ: 8,598: After one week of predicted declines, the Peabody Model has reversed and is strongly bullish. Although the general market may test another 1-2% decline, I anticipate a return to the bull run and strong gains throughout Big Pharma and High Tech. Accordingly, last week the Peabody portfolios added to its favorites including PFE, MSFT, CSCO and AOL. Da Gut Feel: Ding, ding, ding......that's the bell for a PFE buying opportunity. Any purchases from 98- 104 will be a big winner in view of the expected international approval of Viagra next month. I expect PFE to be flying by the end of the week.
Evaluation of Peabody PForecast: The PFE bell rang ...but the market did not hear it. PFE will not run until the horns of the Bull reappear. $1.9 billion for Howmedica was a non-event.Thumbs down.
Peabody PForecast Record (74 weeks): 47-27 (64%)
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Peabody Short-Term PForecast (8/16/98): PFE: 101.19, DJ: 8,425: To determine the PFE short-term direction, you need to predict where the general market is headed. ...Tough job....After a little more pain, I optimistically feel that the 8 year bull will roar again. In the meantime, PFE will be buffeted with any concerns about Viagra specification and irresponsible media stories (ie the WSJ "Freedumb of Information" medical writing staff). Long-term.... international Viagra approvals, improved profit margins sans Medical Technologies, Lipitor, and Celebra submission news.... will relaunch the PFE upbeat trend.
Da Gut Feel: Since "If there is evidence on the dress, you must confess", President Clinton will do a "Checkers" speech and bring optimism to the market. PFE will rise with the Dow to around 105. Growth in Viagra Rxs on Monday would be a big bonus.
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Peabody Portfolio
For only the second time in its history, the Portfolio made two purchases in a single week.
Total return:........................................+59.4% PFE @ 101.19
Annualized return:...............................+62.4%
% of Peabody purchases in the black... 65% (15 out of 23)
The Peabody Portfolio consists of 23 PFE purchase recommendations listed on the PFEr Board since August 14, 1996. To date, the Portfolio has purchased 3,900 PFE shares at an average price of $63.47 (only 2.7% off the subsequent next PFE Valleys).
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# PFE Shares Purchased:.......... 3,900
Average Price of Purchases:....... $63.47
Total Costs: ...............................$247,550
Total Market Value:.....................$394,641
Total Potential Profit:...................$147,091
Date............#..........Purchase
Purchased...Shares...Price
8/14/96:..... 200 ........$36.38
10/25/96:....200 .........$40.44
12/4/96:......200..........$41.69
12/12/96:.....200.........$40.50
12/16/96:.....200.........$40.44
12/31/96:....200..........$41.50
1/2/97:........200.........$40.94
1/28/97: ......200..........$42.38
2/28/97:.......200...........$45.69
3/24/97:.......200...........$44.88
3/27/97:.......200...........$42.81
3/31/97:........200..........$42.56
8/8/97:..........200..........$55.13
4/16/98:........200...........$97.00
4/27/98:........200...........$113.00
5/7/98:..........200...........$107.50
5/15/98:.........100..........$105.00
5/27/98 :........100 .........$101.75
7/06/98 :........100 .........$106.00
7/29/98 :........100 .........$110.50
8/05/98 :........100 .........$104.00
8/07/98 :........100 .........$102.63
8/11/98..........100..........$100.00
Total:............3,900.........$63.47
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Suggested PFE Buying Levels
The following suggested PFE buying levels are based on The Peabody Model. The aggressive buying price level is used in adding shares to The Peabody Portfolio. However, depending upon market conditions an immediate purchase could be made at any time:
:..................$96 to $98.................................
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PFuture Actions That Will Effect PFE Trends
Viagra Rx trends:..................................... Every Monday throughout 1998
News of Viagra adverse reactions
and drug interactions: ...................................Throughout 1998
8th World Meeting on Impotence Research.....August 24-28,1998
European approval of Viagra:........................August- December, 1998
Sale of Howmedica.......................................Late 1998 (reported 8/14/98)
NDA submission of Celebra...........................Late 1998
Expedited review of Celebra.......................One month following NDA submission
Initial reports of Viagra international sales.......September-October, 1998
Third Quarter Earnings.....................................October 14, 1998
PFE R&D Meeting........................................October 29, 1998
ED news in the media: ................................Throughout 1998
Japanese approval of Viagra .........................First half, 1999
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Peabody V-Files
Viagra sales for the second quarter, 1998 were $411 million, the highest recorded sales for a new pharmaceutical product during its first three months on the market.
Analysts estimate that Viagra will have 1998 sales of $0.923 billion, a 35.1% increase over earlier estimates.
............................................1998 Est...1998 Est
...........................................(Billions)....(Billions)..... Comments
NationsBanc........................$1.100.......$0.759...... $.205B (international)
Alex Brown .........................$1.000.......$0.750..... $1.2B (1999)
Deutsche Bank ....................$1.000 ......$0.750..... $1.75B (1999)
Gerard Klauer........................$1.000......$0.300.... $2.9B (2000)
Gruntal ................................$1.000......$1.000.... $8 B peak (2005)
Cowen...................................$0.850........................$5B+ (2002)
Furman Seltz.........................$0.811........................Only $100M in 3rd Qt
Bear Stearns..........................$0.800......$0.600 ......$200M in 3rd Qt
Merrill Lynch...........................$0.750 .....$0625......
Consensus...........................$0.923.......$0.683
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PFE Stock Splits
PFE has split three times in the last ten years ( 2/91, 6/95, and 6/97). The Wayback Machine indicates that PFE usually announces a 2-1 split if PFE trade above 80 for 90 consecutive days. In the January, 1998 survey of 22 PFErs, only 43% felt that PFE will split in 1998.
At the PFE Annual Meeting on April 23, 1998, the PFE CEO stated they will consider requesting additional authorized shares from shareholders later this year. Bottom line, a 3-1 PFE split announcement will be made in late 1998 or early 1999. A request for additional authorized shares was apparently not made by the Board on July 23, 1998.
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