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

To: IRWIN JAMES FRANKEL who wrote (31978)	8/6/2009 10:07:50 PM
From: John Metcalf	Respond to of 52153

"My guess is that GDP drops in 3Q and 4Q 2009." Sure GDP will drop, but biotechs may not. People without income will not buy clothing, electronics, etc. People with health insurance and serious illnesses will not reduce spending. I was just about to say "counter-cyclical". Well, almost.

To: IRWIN JAMES FRANKEL who wrote (31978)	8/6/2009 11:36:12 PM
From: Robohogs	Read Replies (3) \| Respond to of 52153

I have seen reports that if certain items go to zero (i.e., just stop dropping), GDP growth will go to positive figures in Q3 by a large margin. I believe we will get 1-2 quarters of positive growth before double dipping. The Cycle Research guys also say that their indicators are a full go-go for a recovery. I personally discount some of this because the nature of this downturn is different than anything since the 1930s. I do not believe folks will go back to normal (as they now appear to be doing judging by stocks but not by spending - look at warnings out of the bigger food stocks and this happening with retail stocks roaring). The amount of speculation in the system also has me mega concerned. Look at some of the true crap biotechs raising globs of money and rising 4-5x. Even the good ones are going too far - HGSI at $15 with some risk on the second PH III. I agree if the second ph III goes well, approval should be more of a cinch than normal but the valuation pre-second trial is huge (and I made money on this stock so not speaking book). Look at AIG moves, RDN move, MBIA move, ABK move, CIT move, FNM/FRE moves, etc. Look at some mfg concerns - BEAV (great company, 12-15x EPS but with no prospect for growth for a few years), MTW (goes up 5-10% most days), etc. REITS are back to all-time high valuations with a CRE implosion still coming. China doubling? I have seen reports GDP is mis-stated with spending in the GDP numbers before actually being spent at local levels and the same for certain consumer spending (in numbers when shipped to end channels and not when bought). Additionally, job situation continues to weaken. Federal and state budget problems, potentially large tax increases,..... Stocks are behaving like we just had a V recession that was normal depth, etc. I do not see how profit margins sustain recent increases and as a result think as margins normalize lower than recent peaks, EPS growth will be challenging. Can anyone help get me more positive? I hate being this bearish. Jon