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Strategies & Market Trends : The Options Box -- Ignore unavailable to you. Want to Upgrade?

To: Poet who wrote (106)	5/10/2000 9:00:00 AM
From: Poet	Respond to of 10876

From the Wednesday Option Investor newsletter: A call play on WLA: WLA - Warner-Lambert Co $121.38 -3.72 (-0.88 for the week) If you've ever experienced heartburn, bad breath, or one of those colds you just can't shake then you're likely familiar with Warner-Lambert. Some of the popular consumer health care products include Zantac, Listerine, Clorets, and Certs, and Sudafed. The company operates three main business segments: consumer health care products, confectionery products, and pharmaceuticals. Its Parke-Davis and Goedecke pharmaceuticals divisions make analgesics, anesthetics, and homeostatic agents, as well as cholesterol treatments, which includes best-seller Lipitor. This division accounts for more than 60% of sales. There's not many stocks escaping the menacing clutch of the bear trap, but then there's WLA swaggering around in the bullpen. And why not, the company has a lot to flaunt. On April 19th, they reported earnings showing a 35% gain in operating profits, confirming a strong trend in pharmaceutical sales throughout the industry. WLA came in at $0.58 and beat consensus estimate by $0.02 p/s and the whisper number by $0.01. Analysts at Dain Raucher Wessels liked the numbers enough to tag the stock with a Strong Buy rating. And just a week later on April 27th, Pfizer's shareholders overwhelmingly backed the merger acquisition to ultimately create the US's largest drug firm and the world's second largest and. When it was first announced on February 7th, the deal was valued at $93 bln and ended a three- month takeover battle that revolved around Lipitor. Under the terms of the agreement, Warner-Lambert shareholders will receive 2.75 Pfizer (PFE) shares for each share of WLA they own. Shareholders of Morris Plains, NJ-based Warner-Lambert will vote on the deal this Friday, May 12th. Recently the watch dog, European Commission extended a deadline to rule on plans by the drug giants to May 22nd from May 10th after receiving concessions to deal with potential competition problems. The acquisition is expected to be approved and to close by the end of May. Technically the chart is very bullish and appears to have shrugged off the violent gyrations of the market. And there is a pattern of higher-lows and higher-highs clearly evolving. Overhead resistance at $120 was shattered during Friday's "rally" and yesterday, WLA was propelled to a another all-time high at $126.25 on respectable volume. The stock remained perched on its lofty pedestal today to confirm its strength at the new heights. Never once did it dip under the 5 or 10 DMAs ($120.43 and $118.27). Near-term support is at $121 and $122. Look for solid moves off this level before jumping in head-first. We don't want our glasses to take on a rose- colored hue with the PPI coming up on Friday and the Fed meeting next Tuesday, May 16th. In the news, Japanese drug maker Yamanouchi Pharmaceutical said it would start marketing the blockbuster anti-cholesterol drug Lipitor in Japan this week. Lipitor is currently available in about 70 countries and had global sales of $3.7 bln in 1999. With the introduction into the Japanese market, sales are expected to jump to $5 billion in 2000.