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Biotech / Medical : PFE (Pfizer) How high will it go? -- Ignore unavailable to you. Want to Upgrade?

To: Stephen who wrote (4564)	7/23/1998 6:33:00 PM
From: B.REVERE	Read Replies (3) \| Respond to of 9523

Volume on this selloff was below the daily average of 4.5 mill at 4.1 million. Most of the selling was related to programs from mm's (money managers) caught in the glare of Greenspam's jawboning this week. No way rates will go up with s/e asia on precarious ground.Pfe broke support today of 14 1/8 and could not recover under the numerous sell programs. Let's hope that the analysts's meeting goes well enough to overcome the market's jitters. Still long as pfe shows no growth slippage quarter over quarter. People who sold today will want in on this stock in the near future. Most of them will be paying more than 111. Later, BR

To: Stephen who wrote (4564)	7/23/1998 10:05:00 PM
From: flickerful	Respond to of 9523

for what it's worth, a word ( or two) from james cramer... on merck and the market. Stock of the Day Jul 22, 1998 <<Merck: A Penny Here, A Penny There...>> Is this a chance to buy a blue-chip on the dip, or simply evidence that Wall Street expectations have outpaced reality? Merck (NYSE:MRK - news) plunged nearly 10 points today as it guided expectations for 1998 earnings down toward the lower end of analyst estimates. Since Merck is trading in the triple digits, though, 10 points amounted to a modest 7% decline in the stock price. The pharmaceutical giant came up a penny shy of the consensus with its second quarter earnings today, but more importantly indicated disappointing sales patterns for some of its new drugs. In the company's conference call with analysts, Merck said it was comfortable that earnings for 1998 would emerge at the lower end of analyst estimates, which ranged from $4.27 to $4.39 per share. It cited promotional costs associated with the launch of several new drugs this year. While hardly a disaster, several analysts expressed concern about the slow start for several of these new drugs. Among the new products, asthma treatment Singulair rang up sales of $38 million, but baldness drug Propecia had just $16 million in sales and glaucoma drug Cosopt also disappointed. Aggrastat, used to treat angina, had sales of only $6 million, but it was just approved half way into the second quarter. Investors are closely watching the performance of these new drugs because they are needed to take the place of several big revenue producers that will go off patent in 2000-2001. Merck loses patent protection on Vasotech and Pepcid in 2000, which combined for over $2 billion in sales last year. The next year patents expire on Prilosec, a $2.2 billion product, Mevacor and Prinivil. There was also concern about the blockbuster cholesterol-lowering drug Zocor, which is experiencing strong competition from Warner-Lambert's Lipitor. Merck does have several more promising drugs in the pipeline, though. The latest up-and-comer is Migraine drug Maxalt, which received FDA approval last month. The company also confirmed plans to seek FDA approval later this year on Vioxx, a new arthritis treatment with blockbuster potential. Further out, Merck is developing a new class of antidepressants, which is a huge market. Many industry watchers are questioning whether Merck can develop enough new drugs internally to overcome the patent expirations of the next few years, though. Already Merck has shown interest in licensing the marketing rights to biotech drugs still in development. These partnering arrangements can fill out gaps in a product timeline, and because there are so many biotech drugs in phase II and III trials now there is plenty of product to shop for. Merck also has plenty of financial resources to do these deals -- the company just sold it's stake in a joint venture with DuPont (NYSE:DD - news) for $2.6 billion, and it is negotiation to restructure its venture with Astra (NYSE:A - news) . Some speculate Merck could score $10 billion over several years, according to a recent Business Week article. Whether buying into the rights for other companies' products will be sufficient remains to be seen. Many other pharmaceutical firms are choosing to merge, creating a tougher competitive landscape for Merck on its own. As a result of Merck's patent expirations and the evolving competition in big pharma, the stock is garnering a notably discounted valuation relative to its peers. After Tuesday's sell-off to $128.56, Merck is trading at roughly 30 times 1998 estimated earnings (taking into account the guidance from the company) and 26 times '99 estimates. That compares to Pfizer (NYSE:PFE - news) at 44 times '99 estimates, Warner-Lambert (NYSE:WLA - news) at a 45, Eli Lilly (NYSE:LLY - news) at 31 and Bristol-Myers Squibb (NYSE:BMY - news) at 30.