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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (966)	4/17/2000 10:18:00 PM
From: scott_jiminez	Read Replies (3) \| Respond to of 52153

<<The main point to remember is that stocks are driven in the short term by perception, not "reality." >> Precisely Peter. And the 'perception' from October through March was driven by the idea that Genomics will produce vast fortunes. And it was this rising tide that lifted all biotech boats, whether Genomics companies are perceived to be funny money or not. 'Unpleasant, but that seems to [have been] the reality' Was/is the genomics bubble bad? Well, we had a story line that (for once) appears to have captivated the investing public. Many of these investors clearly did NOT know what they were investing in....but they did drive share prices significantly higher. So we can all pooh-pooh the fact that we are being lumped as dotcom-like story stocks but the only way to attract significant investing momentum is to create the sort of 'wow' aura that is strikingly similar to the atmosphere associated with internet stocks. Most biotechs do NOT have sound fundamentals based on revenue generating products. The fact is, for the investing masses, there is indeed a great deal of similarity between the vast majority of biotechs and the vast majority of dotcomers. I think we're being a bit disingenuous in believing biotech is perceived incorrectly. Serious biotechs investors are aware of the substance underlying biotechs' value. The masses do not know this and might even claim, and may not be altogether incorrect, that significant substance underlies many of the dotcomers as well. IMO... At some point, investor's perceptions will shift from negative to positive and biotech will boom again. 'Reality' is best left out of the equation, since it is often as subjective as perceptions. In fact, does not one 'perceive' reality. 'Reality' does not exist without a helluva a lot of interpretation.

To: Biomaven who wrote (966)	4/17/2000 11:09:00 PM
From: Mike McFarland	Read Replies (1) \| Respond to of 52153

"Story stocks" CSCO has a marketcap of 461B, trades at 154 multiple of earnings, pays no dividend. So what makes that story so wonderful? Liquidity--Cisco traded over 100 million shares today. Just take a little nibblin' off each trade, sweet! Biogen by comparison only did 5M shares--no money in churning that! Of course Biogen doesn't pay any dividend either, but at least it is only 27 times earnings. Biogen should do a little shoppin while biotech is down again... Or Genzyme, 20 times earnings, 1.4M shares traded today, they probably don't need to do any shopping. Dang, I should own that one. So when each of these aholes comes on teevee and spews "buy CSCO, MSFT, INTC" over and over and over again, who are these guys really working for?

To: Biomaven who wrote (966)	4/18/2000 9:42:00 AM
From: biowa	Read Replies (1) \| Respond to of 52153

Peter, The main point to remember is that stocks are driven in the short term by perception, not "reality." Right now the perception is that biotechs, being "story" stocks, are lumped in with the dot.coms. I agree completely, as with your comment about being able to swim if we're down 30% in a month. Which is sorta why I disagree with his contention (if applied to biotech) that the owners don't want to hold. The core biotech investor has been with his/her cos. for years (Just ask the State of Wisconsin). If you want to approach anything hinting at a rational valuation estimate in pre-approval land you have to do it on a LT basis, IMHO. Therefore, you inherently will be playing pure market perception in the ST (b/c there are no traditional "fundamentals" to anchor the ST). Further, unlike the tech stocks which can be rescued in the short term by earnings, it's hard to see what will change this (erroneous) perception quickly... finally there isn't much in the way of FDA biotech approvals on the near-term horizon. Here's where I might disagree with you, the rate of FDA approvals for biotechs is accelerating. The bottom line, though, is that biotech fundamentals (unlike dot.com fundamentals) remain sound. At some point, perceptions will again adjust to this reality and biotech will boom again. But mostly I just think you're a really smart guy. <G> biowa