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Biotech / Medical : Eli Lilly

LLY 1,071

+1.4%

Dec 19 9:30 AM EST

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To: Ardner Cheshire, Jr. who wrote (495)	4/20/1999 5:25:00 PM
From: Mike 2.0	Read Replies (1) of 642

Well the dip has caught my attention as a possible buy oppty. I posted this in Value Investing thread: Of course, LLY lost a lot of ground after its Prozac sales were off 4% from same qtr last year, primarily due to advance buying from Q498 as vendors stocked up in anticipation of a price increase. As excess inventories are worked down this should IMO prove a fleeting temporary phenomenon. Using existing earnings est's of $2.35 and $2.69 for Y/E Dec 99 & 2000 respectively, LLY is trading at 31x 1999 fwd earnings and 27x year 2000 fwd earnings. Although 10-13x seems the "magic" number for "value" oppty's here (ie, the Value Investing thread), LLY hasn't traded at a multiple of 31x forward earnings since late March 1998, when it did so for a _very_ brief period (calculation: 1.91 actual FY 98 earnings * 31 PE = ~$59.33...see chart:) stocksite.com I don't believe the dip in Prozac sales are indicative of a trend and the annuity it provides (monopoly I believe thru 2003) commands a higher multiple. What IS holding me back is that their recent earnings release predicted next qtr results are expected to reflect "some" additional working down of excess inventories as well.

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