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Politics : Ask Michael Burke

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To: Thomas M. who wrote (32713)	9/22/1998 10:47:00 AM
From: Knighty Tin	Read Replies (3) of 132070

Tom, I haven't valued Sepracor since the $30s, which is where I sold too soon. I actually do my own puffy earnings estimates. I do one for if everything goes great, and one for if half the stuff goes o.k. If nothing goes well, there isn't any estimating to do. <G> Once I get my two eps estimates, I assign a probability based upon my opinion of the science and the funding. Then I come up with an EXTREMELY puffy fair value of discounted future dividend. And I give them a HUGE discount because they are usually out in time quite a bit. I find the brokerage analysts estimates for developmental companies totally useless. May have to do with banking relationships or plaque on the brain. <G> Even with all that discounting, most biotechs are still undervalued tremendously by the market. So, if I think a stock has a well-discounted worth of $50, as I do Incyte, and it is selling at $21, I get interested. And Incyte is not the most undervalued in my small universe of stocks. MB

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