The Peabody Report: November 29,1998
The irregularly scheduled Peabody Report is intended to foster conversation on the PFEr Board. Comments are welcome and encouraged.
Invest only after conducting your own research.
Have PFun!
BigKNY3
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Peabody Model Trend Prediction
Based on historical PFE patterns, the Peabody Model predicts the following trend :
On November 23, 1998 , boosted by a 215 Dow gain PFE reached a new pending Peak of 116.88. Based on past PFE history, Da Model predicts that PFE will reverse and decline .....to a new Valley of 103.30 by December 15, 1998.
Commentary
The Model's negative trend continues to reflect the current strong Valley to Peak increase of 32.1% as compared to the average gain of 17.3% for 1998 Peaks. The current Valley to Peak run is the highest since the "Viagra NDA filing run" of 44.2% reached on 10/24/98.
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 (11/27/98)......From Today
Last Peabody Peak*:..... 11/23/98......116.88..........+2.5% ...................-6
Last Peabody Valley: .....10/14/98.......88.50.......... -22.4% .................-46
* Pending
Forecasted Next Valley....12/15/98.....103.30..........-9.4%......................16
Potential Peak Valley Strike Price..... 107.23...........-5.7%
Forecasted Next Peak................... 120.38............+5.6%..................
(If Model is Wrong)
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Peabody Peaks and Valleys History (1990-1998)
Here is a summary of the 71 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.........-11.8%.............13...............17.3%
........... 35.........-14.4%.............36................28.1%
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Peabody Short-term PForecasts
Peabody Short-Term PForecast (11/08/98): PFE: 108.88, DJ: 8.975: Although PFE is underperforming both the Dow and Big Pharma over the last three weeks, the market is so strong that all growth stocks are rising. The current 24.3% Valley to Peak gain is the best move up since the 4/21/98 Viagra rally (+27.7%). Can the positive trend continue?
Gut feel: PFE news this week from the ACR (Celebrex) and AHA (Norvasc and Lipitor) conventions should counter the negative trend indicated by the Model, PFE should make a run at 112 as the Dow breaks through 9,000. Investing 101: "Don't fight the tape".
Peabody Short-Term PForecast (11/23/98): PFE: 116.13, DJ: 9,374
Gut-feel: Expect a positive follow-through to yesterday's surge. However, anytime I feel this good about the PFE and the market, something happens to promote profit-taking. Short-term: be very careful!! Da Model is clear: at these levels, the probability of a down trend is much higher than up. Long-term: no problema....a great company, great management, great future, great products.
Evaluation of Peabody PForecasts: The Peabody Dow/PFE Model is right on target. Two thumbs down .
Peabody PForecast Record (88 weeks): 55-33 (63%)
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Peabody Short-Term PForecast (11/29/98): PFE: 114.00, DJ: 9,330: With Viagra relabeling behind it with virtually no impact, PFE will be dominated by the Celebrex news coming from the FDA Advisory Panel on Tuesday and Wednesday. Good news and market momentum could push PFE to a new Peak around 118 before normal profit-taking takes place.
The Peabody Model Dow PForecasts
Utilizing the Peabody Model Dow Amendment, the predicted PFE price based on the Dow levels is 113.18, only 0.7% lower than the current PFE price of 114.00.
The predicted PFE prices based on increases or decreases in the Dow are as follows:
..Increase/Decrease..............................Predicted...........% Change
..In Dow........................Dow Level........PFE Price.....From Current Price
.....+5% .................. .......9,797..............117.89...............+3.4%
.....+3% .................. .......9,610..............116.01...............+1.8%
.....+0% .................. .......9,330..............113.18................-0.7%
......-3% .................. .......9,050..............110.36.................-3.2%
......-5% .................. .......8,864..............108.47.................-4.8%
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Peabody Portfolio....75.3% annualized return
The Peabody Portfolio 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). During this period, the Peabody Portfolio has averaged an annual return of 72.3%. 100% of the purchases are in the black.
Total return:........................................+72.3% PFE @ 114.00
Annualized return:...............................+75.9%
% of Peabody purchases in the black... 100% (27 out of 27)
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# PFE Shares Purchased:.......... 4,300
Average Price of Purchases:....... $66.18
Total Costs: ...............................$284,563
Total Market Value:.....................$490,200
Total Potential Profit:...................$205,638
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.
:..................$99 to $104...........Updated: 11/29/98
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.......November, 1998
AHA and ACR Conventions............................November 8-12, 1998
ACC/AHA Report on Viagra...........................December/January1998
FDA Advisory Panel on Celebrex......................December 1-2,1998
FDA Approval of Celebrex...............................January - February, 1999
Launch of Celebrex..........................................First Quarter, 1999
News of Viagra adverse reactions,
drug interactions, and labeling revisions: ........Throughout 1998 and 1999
Major analyst's Upgrades/Downgrades............Throughout 1998 and 1999
ED news in the media: ................................Throughout 1998 and 1999
Approval of Viagra in Japan.. .........................First half, 1999
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Peabody V-Files
Viagra sales for the first six months on the market were $524 million, the highest recorded sales for a new pharmaceutical product during its first six months on the market.
Viagra sales in 6 months are four times higher than the combined sales of Evista and Propecia in 9 months. In fact, Trovan sales are higher than either Evista or Propecia.
...........................................$Millions
............................1Q.............2 Q........... 3Q..........Total YTD
........................... Sales....... Sales.........Sales...........Sales
Viagra..............Not on market.$411.........$141............$511
Trovan....................$42...........$ 22...........$ 41............$105
Evista....................$34............$ 15...........$ 33.............$82
Propecia.................$13...........$ 16............$24..............$53
As of 11/01/98, analysts estimate that Viagra will have 1998 sales of $0.86 billion, an 11% decline over their prior estimates. This sales level will represent the most successful launch of a pharmaceutical product in its first 9 months on the market.
............................................1998 Est...1998 Est
...........................................(Billions)....(Billions)..... Comments
Paine Webber.......................$0.950.......$0.925...... $1.9B (1999)
Gruntal.................................$0.925.......$1.000........$2.1B (1999)
Everen.................................$0.875........$1.000
Brown Brothers.....................$0.852.......$1.360..... $1.15B (1999)
Deutsche Bank ....................$0.850 ......$1.000
JP Morgan...........................$0.800........$0.800.... $1.15B (1999)
CS First Boston.....................$0.770.......$1.100.......$1.3B (1999)
Consensus...........................$0.860.......$0.965
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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 most likely be announced in January, 1999 as part of the celebration of PFE' s 150 year birthday.
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
PFE 1 Year Chart (With Min/Max and Moving Averages)
dailystocks.net
-5 Year PFE Price Chart
news.com
-Peabody PFE Price History (1987-1998) (Updated: 9/03/98)
www3.techstocks.com
The Peabody Model
-The Peabody Model: History and Findings (Updated: 7/18/98)
-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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