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.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: CURTM who wrote (34634)	5/31/2009 11:25:02 AM
From: Jurgis Bekepuris	Respond to of 78639

PPDI - I have looked at it a year ago and it was expensive then. Right now it is cheaper, but not very cheap. Earnings/EV = ~ 9.8% which reversed kind-of gives your ~12 PE ;) ROE historically was about 15%. Based on ROE, expected return is about 13% annual. Nothing to get excited about. There are stocks with much higher expected return, although they may or may not be more risky. ;) I think it's a buy only if you expect good growth. However, historically it only grew about 10% annually and not very consistently. Do you know why the things should become better in the future?

To: CURTM who wrote (34634)	5/31/2009 11:53:04 AM
From: Spekulatius	1 Recommendation Read Replies (1) \| Respond to of 78639

re PPDI - the valuation looks OK but not compelling with a PE of around 12-13. Growth projections are anemic. My questions are: 1) Do you think that PPDI has an advantage over it's competitors CVD and PRXL? 2) Why do you think PPDI is a better buy than companies like ABT, MDT, COV with trade at a slightly lower valuation and do own the product and IP themselves? The contract business is inherently limited in terms of margins and in most cases lumpy (as can be seen in the large range of earnings estimates).

To: CURTM who wrote (34634)	5/31/2009 12:15:11 PM
From: Paul Senior	Respond to of 78639

Yes, I occasionally look at PPDI. Not enough value in PPDI now as a value stock, and not enough growth in PPDI for a growth stock. Jmo, I could be wrong. The pundits' concern with these outsource stocks is that the pharmaceutical industry continues to consolidate. The fear is that there's going to be less competition in drug research, therefore less total business for the contract research organizations. Perhaps also, there's always that internal tug-of-war between should we do it ourselves or should we farm it out. It seems we'll-do-it-ourselves is the more favored now.