The Peabody Report: January 10,1999
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
J-E-T-S...Jets, Jets, Jets
__________________________________________________________
Peabody Model Trend Prediction
After two months, the Model has reversed and is showing a positive PFE upward trend....On January 8, 1999 , PFE reached a new pending Valley of 120.13. Based on past PFE history, Da Model predicts PFE will move up to a predicted new Peak of $139.34 by the end of January.
Commentary
The current Peak to Valley decline of 6.8% is the lowest in the history of the Model. Historically the average decline is 14.2% which could bring the Valley down to 111.
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 (1/08/99)......From Today
Last Peabody Valley*.... 1/08/99...... 120.13..........-1.7% ...................-2
Last Peabody Peak: .....12/31/98.......128.94........ +5.5% .................-10
* Pending
Forecasted Next Peak....1/29/99.......139.34............+14.0%................19
Potential Peak Peak Strike Price..... 132.14..............+8.1%
Forecasted Next Valley.................. 114.00..............-6.7%..................
(If Model is Wrong)
_____________________________________
Peabody Peaks and Valleys History (1990-1998)
Here is a summary of the 72 Peaks and Valleys in this decade. Note the average increases have always been greater than the average declines in every year:
........... #..............%..................#................%
......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.....13.........-11.5%.............13...............18.3%
........... 36.........-14.2%.............36................28.5%
______________________________________________
Peabody Short-term PForecasts
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.
Evaluation of Peabody PForecast: PFE dropped to 120.13 before bouncing back. Big thumbs up.
Peabody PForecast Record (91 predictions): 57-34 (63%)
_________________________________________________________
Peabody Short-Term PForecast (1/10/99): PFE: 122.25, DJ: 9,643: This could be an important week for PFE depending on the issuing of the 4th quarter earnings report....Since it is a year end close, the report could be issued anytime from Wednesday to Monday. Be very alert!!!! Any PFE strong move down will be a buying opportunity.
Gut feel: Celebrex expenses may temper 4th Qt EPS and earnings from global Viagra sales. However, in the tradition of Joe Namath, a PFE split announcement is guaranteed later this month with a 75% probability of a historic 3 -1. Accordingly, positive vibes, momentum and a continuing positive market will bring PFE over the 130 level during January.
The Peabody Model Dow PForecasts
Utilizing the Peabody Model Dow Amendment, the predicted PFE price based on the Dow of 9,643 is 126.64. The current PFE price of 122.13 is 3.5% lower than the pforecasted price level. Accordingly, PFE is currently underperforming the Dow and past PFE trends.
_______________________________________
Peabody Portfolio....+78.1% 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 84.7% return (78.1% annualized return). A total of 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 50.9%
Total return:........................................+84.7% PFE @ 122.25
Annualized return:...............................+78.1%
% of Peabody purchases in the black... 100% (27 out of 27)
________________________________________
# PFE Shares Purchased:.......... 4,300
Average Price of Purchases:....... $66.18
Total Costs: ...............................$284,563
Total Market Value:.....................$525,675
Total Potential Profit:...................$241,112
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
____________________________________________
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.
:..................$112 to $120...........Updated: 1/10/99
New or pfuture PFErs could consider investing 50% immediately and investing the
remainder at or near Peabody Valleys
________________________________________
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
Initial reports of Viagra global sales.................January 13-18, 1999
4th Qt Earnings and Sales Report............... ...January 13-18, 1999
Possible PFE Split Announcement.................January 21-28,1999
Launch of Celebrex........................................January 18, 1999
Viagra & Celebrex News......................... ......Everday
Major analyst's Upgrades/Downgrades............Throughout 1999
Approval of Viagra in Japan.. .........................First half, 1999
_______________________________________________
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
____________________________________________
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: 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 |
