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

To: Sonki who wrote (1094)	12/10/1998 5:06:00 AM
From: Anthony Wong	Read Replies (1) \| Respond to of 1580

Sonki, you're right about the doom and gloom, and Merck's "warning" (about profits on the low side of analyst estimates) has more to do with their having to spend more money hiring sales reps etc. to step up their sales efforts than a ominous sign of other co. slowing down. Almost everyone of the big phamas has these kinds of corrections (WLA earlier on in the year and a few days ago due to Rezulin, LLY a few months earlier on disappointment of Evista sales, PFE on the Viagra associated deaths etc.) and they've all recovered. I would be interested in buying Merck at some point next year. I'll like to see how Celebrex is doing in the market place first, whether sales of the first Cox-2 inhibitor meet analysts' high expectations. Merck has a lot of challenges ahead of them - patent expirations, Zocor losing market share to Lipitor ( prescriptions"levelling"), their 5 new drugs introcued this year not doing as well as expected. If Vioxx doesn't get priority review status, it would be a great disappoitment for Merck. Anthony

To: Sonki who wrote (1094)	12/10/1998 7:41:00 AM
From: Rob L.	Read Replies (2) \| Respond to of 1580

Sonki, I think your expectations are too high. At 180 and $4.95 earnings you are expecting merck's PE to rise even further to around 36. How can a company growing at only 14% a year (which by the way is very good for a company of Merck's size) justify a PE of 32-36. I realize Merck has been this expensive for some time now, but I am a bit confused over why it is garnering such a rich valuation. Please don't misinterpret my concerns, Merck is a top notch company doing everything right IMO. However, the growth that the current price indicates just isn't there. If anything, MRK is a hold right here and probably can be considered a good anchor for a portfolio, but i would not expect the stock price to move too quickly unless we begin to see some unexpected good news come out. One thing to keep in mind, MRK usually meets or beats estimates so the $4.97 may be a little conservative. On a trading note, if MRK gaps down today on the open (i.e., today's opening price is below yesterday's low price), it may be a good buy for a short term trade as MRK always fills its gaps. Regards