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Biotech / Medical : Boston Scientific (BSX) Any Comments??? -- Ignore unavailable to you. Want to Upgrade?

To: Immi who wrote (492)	9/22/1998 8:02:00 AM
From: John Carragher	Respond to of 798

I believe the drop yesterday was direct result of Heard on Wall Street article in wsj......Here's part of interview with Richard England manager of Putnam Health Sciences fund. Boston Scientific Corp. Dow Jones Newswires -- September 21, 1998 SMARTMONEY ONLINE: Hooked On Drugs -2: Some stocks in the industry will give you growth at many times that rate. Take Warner Lambert, England's second-largest holding. Last year, the company launched its blockbuster cholesterol-lowering drug, Lipitor, which is likely to reach $2.4 billion in sales in 1998. England expects the company's earnings per share to climb 45% this year, 35% in 1999 and 25% for the near-term after that. That explains Warner Lambert's nose-bleed P/E multiple. But, is the stock still a buy? Says England, "I'm not going to put on a straight face and say Warner Lambert's cheap. But you tell me what you want to buy when everything else is blowing up." Indeed, earlier this year England substantially reduced his holdings of troubled HMO and nursing home stocks and added to his positions in drug stocks. "I still view them as having room to go. Their relative P/Es are just a little above middle range. In fact, they traded at higher multiples back in the 1970s," he says. Two positions England increased are American Home Products (AHP) and Merck (MRK), both of which he expects soon to introduce billion dollar drugs. Later this year, AHP's Searle unit is expected to launch Celebra, a Cox-II type drug for fighting osteo and rheumatoid arthritis. (Pfizer (PFE), another portfolio holding, is a marketing partner for both Celebra and Lipitor.) Merck's Vioxx, a similar drug, is expected to be introduced in the spring or summer of 1998. Still, perhaps as a hedge against those high P/E drug stocks, England also accumulated new positions in cardiovascular device makers Boston Scientific (BSX) and Guidant Corp. (GDT) and in the restructuring hospital chain Columbia Health Care (COL) this year. Says England, "We visited Columbia and saw they'd made substantial progress. We thought a resolution with the government was imminent, and wouldn't cost as much as the bears expect. It's a defensive stock, with no overseas exposure." But, adds England, "It's underperformed since we bought it, which is disappointing.' Indeed, the stock is down 22 .4% year-to-date, and the government investigation of billing fraud at Columbia lingers on. Still, England is confident the company will soon see its earnings growth rise to a rate in the low-double digits. The stock is trading at 18 times expected 1998 earnings. Meanwhile, England is keeping half of his portfolio in the ever-soaring drug sector. "The only time these stocks underperform is when their earnings growth lags the market,' he explains. "That happens when the economy is coming out of a rece ssion and everything else is roaring up." Until then, says England, drug stocks are a relatively safe haven. Even at 50 times earnings. For more information and analysis of companies and mutual funds, visit SmartMoney Interactive at smartmoney.com More about Boston Scientific Corp.: From leading business publications From The Wall Street Journal Powered by Quote Agentr and News Agentr from IDD Information Services Copyright c 1998 Dow Jones & Company, Inc. All Rights Reserved.