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

To: scott_jiminez who wrote (1369)	8/2/2000 10:07:41 AM
From: Thomas M.	Read Replies (1) \| Respond to of 52153

I own the stock of a company which earns gobs of money and which is expected to significantly increase these real earnings for the foreseeable future. It is in a rapidly growing sector of technology. The stock is currently trading at a projected PE of 7.5 for estimated FY2001 earnings (14 analysts) Let me remind you that projections a year and a half out are not real earnings. It would be much more appropriate to discuss trailing twelve month earnings. Is this a chip company? A cyclical stock selling at 7.5 times peak earnings is not cheap. Conversely, a biotech stock that is losing money hand over fist can easily have an undervalued stock price. Tom

To: scott_jiminez who wrote (1369)	8/2/2000 9:27:30 PM
From: Spekulatius	Read Replies (1) \| Respond to of 52153

Valuation is always relative. When looking at a stock as an investment, I try to evaluate how a company is valued against its peers and how I anticipate the peer group to do in the future. In the case of GZMO, we are looking at a company with a market cap of a bit more than 120M$, top notch technology platform(s) with its peers having market caps in the B$ range. Of course GZMO could go to 4$ but overall, I believe that at it current valuation, GZMO is a good speculation and that's why I am buying. In addition, its important to look at the near term news flux. I expect the news flux for GZMO to be positive, which increases the chance of a stock price increase even in a rough market.