The Peabody Report: October 18,1998
The Peabody Report is intended to foster conversation on the PFEr Board.
Comments are welcome and encouraged. Invest only after conducting your own research.
Note: PFE predictions based on the Dow Index are included in this Report.
Have PFun!
BigKNY3
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Peabody Peak/Valley Status
Peabody Peaks and Valleys (Updated 10/18/98)
www3.techstocks.com
Peabody Model Trend Prediction
Based on historical PFE patterns, the Peabody Model predicts the following trend :
In the most volatile week in its history, PFE peaked, valleyed and pending peaked during a four day period. Da Model predicts that PFE will extend the current pending Peak to 103.36 by October 26, 1998.
Commentary
Unlike its history over the last 10 years, PFE has been very volatile in 1998...a reflection of the general market and the positive and negative influence of Viagra.
Since it is based primarily on historical trends and Mr. Peabody "gut-feels", the Peabody Model should always be placed in context of the market environments and anticipated news. As evidenced by the mythical Peabody Portfolio (see section below), the Peabody Model works particularly well for PFE investors with a "buy, hold, and buy more at the Valley" investing strategy.
......................................PFE.........................% Chg from...............# Days
.....................................Date.........Price.......Last Price (10/16/98)......From Today
Last Peabody Valley:..... 10/14/98......88.50..........+10.1% ...................-4
Last Peabody Peak*: .....10/15/98......99.25.......... +0.8% ....................-3
* Pending
Forecasted Next Peak....10/26/98.....103.36..........+5.0%......................8
Potential Peak Strike Price.............. 97.35...........-1.1% (Note: Already broken)
Forecasted Next Valley................... 87.50............-11.0%..................
(If Model is Wrong)
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Peabody Peaks and Valleys History (1990-1998)
Here is a summary of the 68 Peaks and Valleys in this decade:
........... #..............%..................#................%
......Peabody.....Average ........Peabody.......Average
......Valleys.......Decline............Peaks........Increase
1990.... 2......... -20.3%..............2...............39.4%
1991.... 0................-.................1................168.8%
1992.... 3..........-15.8%..............3.................16.1%
1993.....4..........-20.7%..............4.................23.3%
1994.....1..........-24.5%..............-...................-
1995.....2..........-10.2%..............3.................47.1%
1996.... 6..........-12.1%..............5.................21.0%
1997.....5..........-14.8%..............5.................32.3%
1998.....12.........-12.1%.............13...............15.7%
........... 35.........-14.4%.............36................27.5%
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Peabody Short-term PForecasts
Peabody Short-Term PForecast (10/11/98): PFE: 93.00, DJ: 7,900: Next week is earnings report time and every PFEr is holding their breath. In fact, PFE never surprises, earnings will be $0.56 or $0.57 in line with the Street's Consensus. The big question will be the spin. Are Viagra's lower 3Q sales (as compared to 2nd Q sales) a disappointment? Is PFE more than Viagra? Is a 20% PFE growth rate worth a 25% premium over the general market? Can PFE go up if the market heads down? Good questions...No one knows the answer....However, anyone can guess......Da Gut Feel: PFE 3Q EPS should not disappoint. It would be particularly difficult to reconcile an optimistic buyback release with a pessimistic EPS report. Viagra 3Q sales will match up with current realistic estimates of $125M to $150M. Strong inline product sales will reinforce that "PFE is much more than Viagra." If the market continues to firm, PFE has the ability to take off to a 35-40% premium over the current Dow YTD growth (current premium is 24.8%). Watch Monday's price action as an indication of what the Street is thinking. Bottom line, last week's 86 will be seen as one of the best buying opportunities in 1998. PFE will reach 100 next week before some profit-taking takes over.
Evaluation of Peabody PForecast: What a long-winded pforecast! Although PFE missed the Consensus by $0.06...it managed not to disappoint...Kudos to the PFE CFO. Viagra sales came in at $141....which was exactly within the expected analysts' range of 125 to 150. Big Pharma analyst Hemant Shah concluded "Celebrex will be the key to PFE going forward" and Dresdner's analyst Pajwani said "I think investors' focus will shift away from Viagra now to Celebrex". Finally, PFE reached 99.25 ..up from 93 last week..Overall, a long-winded thumbs up!!
Peabody PForecast Record (83 weeks): 52-31 (63%)
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Peabody Short-Term PForecast (10/18/98): PFE: 98.44, DJ: 84,17: With the PFE 3Q Earnings Report put to bed, price action will be effected by momentum, the market and other Big Pharma EPS reports (WLA and LLY). Given the positive vibes in the market place, Da Gut Feel will follow the Model to a new Peak of 103 this week... Caveat: I'm a half-full person and this market is explosive.
Based on the Peabody Model Dow Amendment, here are the PFE prediction assuming 5% increases or decreases in the Dow:
..........................................................Predicted...........% Change
....................................Dow Level........PFE Price.....From Current Price
5% increase in Dow .......8,838..............106.65...............+8.3%
5% decline in Dow..........7,996................94.06...............-4.4%
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Peabody Portfolio
Total return:........................................+48.8% PFE @ 98.44
Annualized return:...............................+50.6%
% of Peabody purchases in the black... 66.7% (18 out of 27)
One Peabody purchase was made last week based on the 10/11/98 buying strategy "$88 to $93". The Peabody Portfolio now consists of 27 PFE purchase recommendations listed on the PFEr Board since August 14, 1996. To date, the Portfolio has purchased 4,300 PFE shares at an average price of $66.18 (only 3.5% off the subsequent next PFE Valleys).
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# PFE Shares Purchased:.......... 4,300
Average Price of Purchases:....... $66.18
Total Costs: ...............................$284,563
Total Market Value:.....................$423,292
Total Potential Profit:...................$138,730
Date............#..........Purchase
Purchased...Shares...Price
8/14/96:..... 200 ........$36.38
10/25/96:....200 .........$40.44
12/4/96:......200..........$41.69
12/12/96:.....200.........$40.50
12/16/96:.....200.........$40.44
12/31/96:....200..........$41.50
1/2/97:........200.........$40.94
1/28/97: ......200..........$42.38
2/28/97:.......200...........$45.69
3/24/97:.......200...........$44.88
3/27/97:.......200...........$42.81
3/31/97:........200..........$42.56
8/8/97:..........200..........$55.13
4/16/98:........200...........$97.00
4/27/98:........200...........$113.00
5/7/98:..........200...........$107.50
5/15/98:.........100..........$105.00
5/27/98 :........100 .........$101.75
7/06/98 :........100 .........$106.00
7/29/98 :........100 .........$110.50
8/05/98 :........100 .........$104.00
8/07/98 :........100 .........$102.63
8/11/98..........100..........$100.00
9/01/98..........100..........$97.63
10/06/98.........100..........$94.00
10/09/98.........100..........$89.00
10/14/98.........100..........$89.50
Total:............4,300.........$66.18
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Suggested PFE Buying Strategies
The following suggested PFE buying levels are based on The Peabody Model. The buying price level is used in adding shares to The Peabody Portfolio. However, depending upon market conditions an immediate purchase could be made at any time.
:..................$86 to $94...........Updated: 10/18/98
New or pfuture PFErs could consider investing 50% immediately and investing the
remainder at or near Peabody Valleys
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Suggested PFE Selling Strategies
Selling of PFE is recommended if a major PFE or market pfundamental significantly changes.
If you need to raise capital by selling PFE, one suggested selling strategy is to set a 50% market sell order at a level 8% higher than the last Peabody Valley. After a period of one month evaluate the results of this action and consider selling the remaining 50%...once again at a level 8% higher than the latest Peabody Valley reached during that month. You should also take into account possible pfuture actions that may effect PFE trends (see below).
PFuture Actions That May Effect PFE Trends
Viagra Rx trends:..................................... Every Monday throughout 1998
Initial reports of Viagra international sales.......October, 1998
PFE R&D Meeting........................................November 6, 1998
ACC/AHA Report on Viagra...........................December 1998
FDA Advisory Panel on Celebrex......................December-January, 1999
FDA Approval of Celebrex...............................February 24, 1999
News of Viagra adverse reactions
and drug interactions: ...................................Throughout 1998
Major analyst's Upgrades/Downgrades............Throughout 1998
ED news in the media: ................................Throughout 1998
Japanese approval of Viagra .........................First half, 1999
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Peabody V-Files
Viagra sales for the first six months on the market were $524 million, the highest recorded sales for a new pharmaceutical product during its first six months on the market.
As of 10/11/98, analysts estimate that Viagra will have 1998 sales of $0.934 billion, a 27.5% increase over earlier estimates.
............................................1998 Est...1998 Est
...........................................(Billions)....(Billions)..... Comments
NationsBanc........................$1.100.......$0.759...... $.205B (international)
Credit Suisse First Boston.....$1.100.........................$1.7B (1999)
Morgan Stanley....................$1.010..........................$4.8B (2004)
Alex Brown .........................$1.000.......$0.750..... $1.2B (1999)
Deutsche Bank ....................$1.000 ......$0.750..... $1.75B (1999)
Gerard Klauer........................$1.000......$0.300.... $2.9B (2000)
Gruntal ................................$1.000......$1.000.... $8 B peak (2005)
Alex Brown............................$1,000........................$1.2B (1999)
Cowen...................................$0.850........................$5B+ (2002)
Morgan Stanley......................$0.836.........$1.010........$1.7B (2000)
Furman Seltz.........................$0.811........................Only $100M in 3rd Qt
Bear Stearns..........................$0.800......$0.600 ......$200M in 3rd Qt
JP Morgan..............................$0.800.......$0.800.......$1.925B (2001)
Merrill Lynch...........................$0.750 .....$0625......
Consensus...........................$0.934.......$0.733
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PFE Stock Splits
PFE has split three times in the last ten years ( 2/91, 6/95, and 6/97). The Wayback Machine indicates that PFE usually announces a 2-1 split if PFE trade above 80 for 90 consecutive days. In the January, 1998 survey of 22 PFErs, only 43% felt that PFE will split in 1998.
At the PFE Annual Meeting on April 23, 1998, the PFE CEO stated they will consider requesting additional authorized shares from shareholders later this year. Bottom line, a 3-1 PFE split announcement will be made in late 1998 or early 1999.
A request for additional authorized shares was apparently not made by the Board on July 23, 1998.
Useful PFE Links
-3 year PFE chart versus the Dow growth. control.bigcharts.com
-6 Month PFE Chart with Da Bollinger Bands Playing 207.95.154.130
-5 Year PFE Price Chart
news.com
-Peabody PFE Price History (1987-1998) (Updated: 9/03/98)
www3.techstocks.com
-Compare PFE with Other Stocks and Indexes
quicken.com
The Peabody Model
-The Peabody Model Amendment #1: The Influence of the Dow (Updated: 10/17/98)
www3.techstocks.com
The Market Environment
-Briefing.com- Reviews current market environment
briefing.com
-World Markets
quote.yahoo.com
Investment Advice
-26 Weeks to Successful Investing- IBD
ibd.infostreet.com
- 8 easy ways to lose your shirt in stocks
usatoday.com
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