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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (95191)	3/24/2002 1:47:19 PM
From: Ralph W.	Read Replies (1) \| Respond to of 132070

Joan - According to a Yahoo table, drug stocks are selling at about a 34 PE with revenues up only about 9 1/2% over the corresponding quarter. This, coupled with generally miserable looking charts, make me wonder if they aren't moving toward a further sell-off. They show MRK at an 18 PE, though their PE figures are frequently wrong according to other sources. If your intrinsic value is correct then it merits a big Hmmm.And is there a better place to risk some long-term money than the drug stocks? Hmmm. It'll be interesting to watch Merck's performance compared to others in the weeks to come. R

To: Joan Osland Graffius who wrote (95191)	3/24/2002 11:49:42 PM
From: Richard Nehrboss	Read Replies (1) \| Respond to of 132070

Joan, Would you be willing to share your intrinsic valuation model on Merck with us? I've been looking through the industry for some plays, and I arrive at at an intrinsic value of $89 for Merck using a two stage discounted cash flow valuation with the following assumptions: earnings $7.2b stage 1 growth 13.5% for 10years (pretty aggressive) stage 2 growth 6% ad infinitum a discount rate of 13% When I'm more conservative with the stage one growth rate at around 11%, it's somewhere in the 60's. Thanks Richard