Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: synchro who wrote (8270)	11/6/1999 4:40:00 AM
From: synchro	Respond to of 9523

Pfizer's PE is exaggerated: the high PE is partly due to Pfizer R&D, which is way above industry average. I took the time to compile the following numbers, and I adjusted Pfizer's R&D down to Merck's and Bristol-Myers' average R&D-to-Sales ratio. Its trailing-12-month (TTM) PE went from 53 to 43. Pfizer's growth rate is 63% higher than Merck's and 138% higher than Bristol-Myer's. Yet PFE's "adjusted" PE premium over Merck is only 26% and is actually at a discount to Bristol-Myers. Why would Pfizer still be selling at a premium to Merck? Merck's drugs are closer to patent-expiration, and Pfizer's drugs still early in the cycle, so that could be one reason. My point is that Pfizer is closer to its intrinsic value now than a week ago. Now, the market has probably priced in a sweetening deal by Pfizer. As long as the bid for Warner-Lambert is still accretive to Pfizer, then the deal still makes sense. Just remember that the meaning of accretive is also a function of Pfizer's above-average R&D. If Pfizer's price continues to drift lower, it makes ever more sense to buy more. PFE MRK BMY Price 34.75 80.38 76.125 TTM EPS 0.65 2.37 1.74 TTM PE 53.46 33.91 43.75 TTM Sales per share 3.98 12.95 9.71 R&D % of Sales 17.2% 13.5% 12.7% R&D per Share 0.68 1.75 1.23 Revised R&D % of Sales 13.1% 13.5% 12.7% R&D per share 0.52 1.75 1.23 Difference 0.16 - - Revised EPS 0.81 2.37 1.74 Revised PE 42.73 33.91 43.75 Sales Growth 22.5% 13.8% 9.5% Source: Yahoo Finance

To: synchro who wrote (8270)	11/6/1999 11:24:00 AM
From: crimson	Respond to of 9523

Synchro - Could not agree more. Short-term traders will profit from no deal. Long-term players will benefit from a deal. Wonder why PFE is still dipping? Because funds believe they will get the deal. Please drop more is all I can say. I have owned PFE a long time, and bought more today at $34 1/2. Wouldn't mind losing ground some more. This is an affordable stock at these price levels and do not be surprised to see $50 early next year. Have people forgotten the 5-year chart on PFE? If so, take a look. :o)