The Peabody Report: January 2,1999
The PRN 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 December 31, 1998 , PFE reached a new pending Peak of 128.94. Based on past PFE history, Da Model predicts that PFE will reverse and decline .....to a new Valley of 114 by January 21, 1999.
Commentary
The Model's negative trend continues to reflect the current dramatic Valley to Peak increase of 45.7% as compared to the average gain of 18.3% for 1998 Peaks. The current Valley to Peak run is the highest since the +56.0% reached on 7/07/98.
It should also be noted that a "Near Valley" of 108.63 was reached on 12/01/98 and had a projected Peak of 126.44 as noted in the 12/13/98 Peabody Report.
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 (12/31/98)......From Today
Last Peabody Peak*:..... 12/31/98......128.94..........+3.2% ...................-2
Last Peabody Valley: .....10/14/98.......88.50.......... -29.2% .................-80
* Pending
Forecasted Next Valley....1/21/99.....114.00............-8.8%......................19
Potential Peak Valley Strike Price..... 118.62...........-5.1%
Forecasted Next Peak................... 135.38............+8.3%..................
(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...............18.3%
........... 35.........-14.4%.............36................28.5%
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Peabody Short-term PForecasts
Peabody Short-Term PForecast (12/14/98): PFE: 114.88, DJ: 8,822: This should be a dramatic week for the market and PFE. The House impeachment vote has the potential to significantly negatively effect the market. The drop could be greater than 5% bringing PFE down below 108.
Gut-feel: By the end of the week, President Clinton will be impeached. The country and the markets will not be happy. Braced yourselves for the strong move down. The good news is that new buying opportunities will surface ....and that end of the year portfolio changes and a FDA Celebrex approval will bring PFE back by 12/31/98 to the level predicted by BigKNY3 on January 11, 1998.....115.
Evaluation of Peabody PForecast: PFE dropped to 110...but impeachment was a non-factor. PFE closed up 10 points over prediction. Thumbs down.
Peabody PForecast Record (90 predictions): 56-34 (62%)
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Peabody Short-Term PForecast (1/02/99): PFE: 125.00, DJ: 9,181: PFE will be driven by analyses of the approved Celebrex labeling. The final FDA labeling follows the Advisory Panel recommendations and really is not a surprise. However, Da Model continues to predict profit-taking coming off the current strong Valley to Peak run. Accordingly, the predicted Valley of 114 is basically your current downside risk.
Gut feel: PFE will continue to move with the market (up or down). Other positive factors to consider: 4 Qt EPS report (around 1/13/99) which will include global Viagra sales for the first time and an expected split announcement on 1/21/99 (probability: 97%). Overall, expect PFE to make a run at 120 before heading higher over 130.
The Peabody Model Dow PForecasts
Utilizing the Peabody Model Dow Amendment, the predicted PFE price based on the Dow of 9,182 is 115.92. The current PFE price of 125.00 is 7.8% higher than the expected price level. Accordingly, PFE has been currently outperforming the Dow and past PFE growth spurts..
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Peabody Portfolio....+84.8% 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 a return of 88.9% (84.8% annualized return). 100% of the purchases are in the black.
In 1998, 14 PFE purchases (1,700 shares) were made at an average price of $102.06. The annualized return on these investments is currently 60.9%
Total return:........................................+88.9% PFE @ 125.00
Annualized return:...............................+84.8%
% 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:.....................$537,500
Total Potential Profit:...................$252,938
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.
:..................$110 to $116...........Updated: 1/02/99
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
FDA Approval of Celebrex..............................End of December 1998 (approved 12/31/98)
Initial reports of Viagra global sales.................January 13, 1999
4th Qt Earnings and Sales Report............... ...January 13, 1999
Possible PFE Split Announcement.................January 21,1999
Launch of Celebrex........................................January, 1999
Viagra News.......................................... ......Everday
Major analyst's Upgrades/Downgrades............Throughout 1999
Approval of Viagra in Japan.. .........................First half, 1999
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Peabody V-Files
Updated: 11/01/98
Viagra sales for the first six months on the market were $552 million, the highest recorded sales for a new pharmaceutical product during its first six months on the market.
Viagra sales in 6 months are four times higher than the combined sales of Evista and Propecia in 9 months. In fact, Trovan sales are higher than either Evista or Propecia.
...........................................$Millions
............................1Q.............2 Q........... 3Q..........Total YTD
........................... Sales....... Sales.........Sales...........Sales
Viagra..............Not on market.$411.........$141............$552
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
Updated: 12/13/98
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 late January, 1999 as part of the celebration of PFE' s 150 year birthday. Probability of split: 97%.
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 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 |
