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Biotech / Medical : PFE (Pfizer) How high will it go? -- Ignore unavailable to you. Want to Upgrade?

To: Steve who wrote (7904)	6/12/1999 9:01:00 AM
From: Albert Martin	Read Replies (1) \| Respond to of 9523

READ!! From Individual Investor Online Its amazing that most or an awful lot of "investors" in PFE have an investing time line of just a few months! 10 years from now and this will just be a blip at most. Trovan would have NEVER been a billion dollar product!! It represents a SMALL % of total sales. When the inhaled insulin product hits the market all this fuss over Trovan will seem like a distant bad memory. Believe me, it will be a billion dollar drug!! Here is the article. <Picture><Picture>Stocks & Funds Get Quotes, News and Analysis Ticker Symbol Search Home COMMUNITY Message Boards Stocks A-Z IIONLINE RESEARCH Stock of the Day Analysis & Opinion Web Research Archives Industry Reports Mutual Funds Insider Trading News PORTFOLIOS Your Portfolio Magic 25TM INDI SmallCap 500TM Trading Floor EDUCATED INVESTOR Investor UniversityTM 401(k) ForumTM I.I. Magazine SUBSCRIPTIONS Individual Investor Magazine Free E-Mail Account Free Newsletter RESOURCES Financial Planning E-commerce IIOnline Bookstore Investor Relations Fast, Free Info HELP Contents Your Account Log In Log Off <Picture> Fun Stuff <Picture><Picture>Books on Investing Just a click away! Analyst Bullpen Analysis Archive An Open Letter to All Pfrustrated Pfizer Shareholders: Tell us what you think in PFE's Board. TODAY I. I. A N A L Y S I S RADAR SCREEN on INSIDER TRADING MICROCAP JOURNAL: McNaughton Apparel, PawnMart Sears to Tease New Strategy June 17th How to Play RJR Nabisco's Upcoming Breakup Microsoft's Ballmer on the PC's Future Onsale.com: Sell This One Dell Being Dull? No Problem. Cover Your Assets Lockheed Martin Drops Another Earnings Bomb Pacific Sunwear Sell-Off Creates Buying Opportunity BID & ASK: Fair, Isaacs Deserves Credit C O M M E N T A R Y TAUB TALK: Identifying the Next Bank Takeover Target DID YOU MISS A DAY? Last 7 Days Archived ------------------------------------------------------------------------ <Picture>http://www.iionline.com To: Pfizer Investors From: Steve Smith RE: The 34% decline in Pfizer's stock price since April 14th Subject: What the $%@!#! is a shareholder to do? Date: 6/10/99 Let's all take a deep a breath and swallow the cold hard facts of an efficient market. Pfizer stock has lost 34% of its value in the past two months and has by more than 15% to $99 in the past three days. Before we get into the reasons for Pfizer's recent demise let's find its place within the pantheon of this incredible bull market. Pfizer has been one the best performing stocks over the past 4 years -- Internet mania aside -- having gained over 650% since 1995 to its peak of $150 per share. Even at its current price of $99 we are still looking at almost a 150% gain from its 1997 price of $40 per share. Was it overpriced at $150 per share trading at 68 times earnings forward earnings? Of course. Is it over priced now at $99 per share or 35 times next years recently downwardly revised estimate of $2.85 per share? Well, that's what we're gonna try to figure out. Pfizer's move down from $150 to the $115 area was the result of money rotating out of the large cap, richly valued winners into beaten down cyclicals and undervalued small caps. I think that's great; it seems prudent and healthy for the market to show some price discretion. Nothing wrong with a 23% correction for an overpriced stock. Broaden out the market and keep the bull going. What I don't like or agree with is Salomon Smith Barney analyst Christina Heuer, downgrading the stock this morning after yesterday's $6 pummeling. The FDA's decision to limit Pfizer's antibiotic drug Troven for use in only serious cases was the catalyst for both the sell-off and the downgrade. While most analysts have adjusted earnings estimates for 1999 and 2000 to an average of $2.45 per share and $2.85 per share respectively only Heuer has downgraded the stock and lowered the annual earnings growth rate prediction to 15% from 20%. Why has this FDA decision weighed so heavily upon her view of Pfizer? While the FDA decision has forced most analysts to lower the projected revenue for Troven in 2000 from $400 million down to $150 million, Heuer's number has been slashed from $1 billion down to $100 million. That billion dollar number she was working with seems a bit stale. Maria Phillips, an analyst with Warburg Dillon Read says 'Trovan was launched [in February of 1998] with a lot of hype. But it quickly became apparent that sales would fall short of initial projections due to some cheaper alternatives and fears of side effects. Those fears have now been borne out by the FDA's liver toxicity warning.' Phillips now projects Troven sales to reach $180 in 2000 but she is maintaining a 'buy' recommendation with a price target of $140 per share. Even if Troven generated $1 billion in revenue that would have represented only 4.5% of Pfizer's annual revenue. At $150 million it will represent about 1%. This should have negligible impact on earnings. Heuer's downgrade also come from her belief that 'sales of Viagra and Celebrex have fallen below expectations…there are no blockbuster drugs in the pipeline.' Ahh, the pipeline. According to Jeffery Chaffkin, an analyst with PaineWebber, 'Pfizer has more than enough, a total of seven, products that have recently come out that growing at double-digit rates.' Chaffkin also emphasizes the fact that Pfizer spends nearly $2.8 billion a year in R & D, that's more than double that of competitors such as Merck (NYSE: MRK - Quotes, News, Boards) which spends about $700 million per year. He goes on to say 'no real new information about the pipeline will be revealed until the next R&D review in the fall.' He is maintaining a 'buy' recommendation, predicting 20% annual earnings growth over the next five years and has a twelve month price target of $143 per share. Big-time bull Joe Battipaglia, chief investment officer at Gruntal appearing on CNBC this morning, said 'premium companies will always command premium multiples, especially in a bull market.' He went to reiterate the well known fact that 'Pfizer has one of the best management teams in the world and has the resources to continue to grow revenues.' I guess he likes Pfizer at $100. Bottom Line: While there maybe some more fallout over the next few weeks I agree. Pfizer will be trading well over $100 a year from now. Tell us what you think in PFE's Board <Picture>Like this Article? 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