Judy, I am actually long puts on Warner Lambert and the DRG. My future purchases will probably be individual names as the premiums on the DRG have gone beyond ridiculous.
As a fundamentalist, I see huge competition and major costs to keep those pipelines funded. Also, the free ride on pricing for the dopers is just about over. Nobody liked Hilary's plan, but market tough times will hit insurance co. portfolios and make the drug costs something that need to be controlled. I also expect the govt. to get pro-active again, to encourage real research and not to allow a co. a monopoly just because it made a cancer drug buffer that helps solve the hiccup problem on the previous formulation.
Basically, when you get pe ratios like the drug firms have, competition comes fromt the Moon. A lot of the biotech discoveries are aimed right at the heart of large pharmaceutical corp cash cows. They either have to buy in or lose share.
The analysts have lost perspective. When the dopers were getting wacked by the Billary noises, the analysts thought they were dead meat and the estimates were for almost no growth. Now, with the stocks at the top, the estimates are trees that grow forever. At extremes, the forward eps are always a joke. Pfizer already gave us the first indication of that with its quarterly flop. And Pfizer is in much better shape than most as far as its current products and its pipeline goes.
The saying about fluff groups like Internet stocks among even the momentum players was always "Hold your nose and buy." <G> I do not subscribe to that philosophy as years of whisky have made my nose tender.
MB |
