The Peabody Report: December 13,1998
The PRN 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 Model Trend Prediction
Based on historical PFE patterns, the Peabody Model predicts the following trend :
On December 9, 1998 , PFE reached a new pending Peak of 117.56. Based on past PFE history, Da Model predicts that PFE will reverse and decline .....to a new Valley of 103.91 by the end of the year.
Commentary
The Model's negative trend continues to reflect the current dramatic Valley to Peak increase of 32.8% as compared to the average gain of 17.3% for 1998 Peaks. The current Valley to Peak run is the highest since the "Viagra NDA filing run" of 44.2% reached on 10/24/98.
It should also be noted that a "Near Valley" of 108.63 was reached on 12/01/98. Time will tell whether this was a true Valley point.
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.
......................................PFE.........................% Chg from...............# Days
.....................................Date.........Price.......Last Price (12/11/98)......From Today
Last Peabody Peak*:..... 12/09/98......117.56..........+2.3% ...................-4
Last Peabody Valley: .....10/14/98.......88.50.......... -23.0% .................-60
* Pending
Forecasted Next Valley....12/31/98.....103.91..........-9.5%......................17
Potential Peak Valley Strike Price..... 108.16...........-5.8%
Forecasted Next Peak................... 126.44............+10.1%..................
(If Model is Wrong)
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Peabody Peaks and Valleys History (1990-1998)
Here is a summary of the 71 Peaks and Valleys in this decade:
........... #..............%..................#................%
......Peabody.....Average ........Peabody.......Average
......Valleys.......Decline............Peaks........Increase
1990.... 2......... -20.3%..............2...............39.4%
1991.... 0................-.................1................168.8%
1992.... 3..........-15.8%..............3.................16.1%
1993.....4..........-20.7%..............4.................23.3%
1994.....1..........-24.5%..............-...................-
1995.....2..........-10.2%..............3.................47.1%
1996.... 6..........-12.1%..............5.................21.0%
1997.....5..........-14.8%..............5.................32.3%
1998.....12.........-11.8%.............13...............17.3%
........... 35.........-14.4%.............36................28.1%
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Peabody Short-term PForecasts
Peabody Short-Term PForecast (11/29/98): PFE: 114.00, DJ: 9,330: With Viagra relabeling behind it .....with virtually no impact, PFE will be dominated by the Celebrex news coming from the FDA Advisory Panel on Tuesday and Wednesday. Good news and market momentum could push PFE to a new Peak around 118 before normal profit-taking takes place.
Evaluation of Peabody PForecast: PFE may a run to 117.56 before profit-taking set in. Thumbs up.
Peabody PForecast Record (89 predictions): 56-33 (63%)
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Peabody Short-Term PForecast (12/14/98): PFE: 114.88, DJ: 8,822: This should be a dramatic week for the market and PFE. The House impeachment vote has the potential to significantly negatively effect the market. The drop could be greater than 5% bringing PFE down below 108.
Gut-feel: By the end of the week, President Clinton will be impeached. The country and the markets will not be happy. Braced yourselves for the strong move down. The good news is that new buying opportunities will surface ....and that end of the year portfolio changes and a FDA Celebrex approval will bring PFE back by 12/31/98 to the level predicted by BigKNY3 on January 11, 1998.....115.
The Peabody Model Dow PForecasts
Utilizing the Peabody Model Dow Amendment, the predicted PFE price based on the Dow of 8,822 is 108.05, 6.8% lower than the current PFE price of 114.88. Accordingly, PFE has been currently outperforming the Dow and past PFE growth spurts..
The predicted PFE prices based on increases or decreases in the Dow are as follows:
..Increase/Decrease..............................Predicted...........% Change
..In Dow........................Dow Level........PFE Price.....From Current Price
.....+5% .................. .......9,263..............122.74...............+6.8%
.....+3% .................. .......9,087..............119.59...............+4.1%
.....+0% .................. .......8,822..............114.88................0.0%
......-3% .................. .......8,557..............110.84.................-3.5%
......-5% .................. .......8,381..............107.69.................-6.3%
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Peabody Portfolio....72.8% annualized return
The Peabody Portfolio consists of 27 PFE purchase recommendations listed on the PFEr Board since August 14, 1996.
To date, the Portfolio has purchased 4,300 PFE shares at an average price of $66.18 (only 3.5% off the subsequent next PFE Valleys). During this period, the Peabody Portfolio has averaged an annual return of 73.6%. 100% of the purchases are in the black.
In 1998, 14 PFE purchases (1,700 shares) have been made at an average price of $102.6. The annualized return on these investments is currently 45.7%
Total return:........................................+73.6% PFE @ 114.88
Annualized return:...............................+72.8%
% of Peabody purchases in the black... 100% (27 out of 27)
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# PFE Shares Purchased:.......... 4,300
Average Price of Purchases:....... $66.18
Total Costs: ...............................$284,563
Total Market Value:.....................$493,963
Total Potential Profit:...................$209,400
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
9/01/98..........100..........$97.63
10/06/98.........100..........$94.00
10/09/98.........100..........$89.00
10/14/98.........100..........$89.50
Total:............4,300.........$66.18
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Suggested PFE Buying Strategies
The following suggested PFE buying levels are based on The Peabody Model. The 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.
:..................$101 to $106...........Updated: 12/13/98
New or pfuture PFErs could consider investing 50% immediately and investing the
remainder at or near Peabody Valleys
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Suggested PFE Selling Strategies
Selling of PFE is recommended if a major PFE or market pfundamental significantly changes.
If you need to raise capital by selling PFE, one suggested selling strategy is to set a 50% market sell order at a level 8% higher than the last Peabody Valley. After a period of one month evaluate the results of this action and consider selling the remaining 50%...once again at a level 8% higher than the latest Peabody Valley reached during that month. You should also take into account possible pfuture actions that may effect PFE trends (see below).
PFuture Actions That May Effect PFE Trends
Viagra Rx trends:.......................................... Every Monday
FDA Approval of Celebrex..............................End of December 1998
ACC/AHA Report on Viagra...........................January 1999
Initial reports of Viagra international sales.......January 14, 1999
4th QT Earnings Report............................. ...January 14, 1999
Launch of Celebrex........................................First Quarter, 1999
Viagra News.......................................... ......Everday
Major analyst's Upgrades/Downgrades............Throughout 1998 and 1999
Approval of Viagra in Japan.. .........................First half, 1999
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Peabody V-Files
Updated: 11/01/98
Viagra sales for the first six months on the market were $524 million, the highest recorded sales for a new pharmaceutical product during its first six months on the market.
Viagra sales in 6 months are four times higher than the combined sales of Evista and Propecia in 9 months. In fact, Trovan sales are higher than either Evista or Propecia.
...........................................$Millions
............................1Q.............2 Q........... 3Q..........Total YTD
........................... Sales....... Sales.........Sales...........Sales
Viagra..............Not on market.$411.........$141............$511
Trovan....................$42...........$ 22...........$ 41............$105
Evista....................$34............$ 15...........$ 33.............$82
Propecia.................$13...........$ 16............$24..............$53
As of 11/01/98, analysts estimate that Viagra will have 1998 sales of $0.86 billion, an 11% decline over their prior estimates. This sales level will represent the most successful launch of a pharmaceutical product in its first 9 months on the market.
............................................1998 Est...1998 Est
...........................................(Billions)....(Billions)..... Comments
Paine Webber.......................$0.950.......$0.925...... $1.9B (1999)
Gruntal.................................$0.925.......$1.000........$2.1B (1999)
Everen.................................$0.875........$1.000
Brown Brothers.....................$0.852.......$1.360..... $1.15B (1999)
Deutsche Bank ....................$0.850 ......$1.000
JP Morgan...........................$0.800........$0.800.... $1.15B (1999)
CS First Boston.....................$0.770.......$1.100.......$1.3B (1999)
Consensus...........................$0.860.......$0.965
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PFE Stock Splits
Updated: 12/13/98
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 most likely be announced in January, 1999 as part of the celebration of PFE' s 150 year birthday. Probability: 95%.
Useful PFE Links
-3 year PFE chart versus the Dow growth. control.bigcharts.com
-6 Month PFE Chart with Da Bollinger Bands Playing 207.95.154.130
PFE 1 Year Chart (With Min/Max and Moving Averages)
dailystocks.net
-5 Year PFE Price Chart
news.com
-Peabody PFE Price History (1987-1998) (Updated: 9/03/98)
www3.techstocks.com
The Peabody Model
-The Peabody Model Amendment #1: The Influence of the Dow (Updated: 10/17/98)
www3.techstocks.com
The Market Environment
-Briefing.com- Reviews current market environment
briefing.com
-World Markets
quote.yahoo.com
Investment Advice
-26 Weeks to Successful Investing- IBD
ibd.infostreet.com
- 8 easy ways to lose your shirt in stocks
usatoday.com
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