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Biotech / Medical : PFE (Pfizer) How high will it go? -- Ignore unavailable to you. Want to Upgrade?

To: BigKNY3 who wrote (7221)	3/15/1999 8:45:00 PM
From: BigKNY3	Read Replies (2) \| Respond to of 9523

Mar 12, 1999 Why Monsanto is in a Terrific Position Monsanto (NYSE:MTC - news) has been in the news over the last two weeks as investors speculate on the potential link-up between the life-sciences company and chemical giant Dupont (NYSE:DD - news) . While this speculation may never come to fruition, what is clear is that Monsanto is a more fundamentally sound company today that it was last year when American Home Products (NYSE:AHP - news) offered to acquire the company. After shedding almost $13 billion in market value since the merger fell apart, Monsanto management is under enormous pressure to increase its share price. There are many scenarios that can play out, all of which will benefit shareholders. The launch of Monsanto's key arthritis drug, Celebrex, has exceeded the most optimistic projections. At the start of this year analysts had expected Celebrex to generate sales of $500 million. Today, estimates for 1999 sales range from $1.5-$2.0 billion. Celebrex is the second fastest pharmaceutical product launch in history, behind only Pfizer's (NYSE:PFE - news) Viagra. Shares of Monsanto have moved only modestly higher in recent weeks despite an explosive start of Celebrex. Marketed by pharmaceutical powerhouse Pfizer (NYSE:PFE - news) , Celebrex is enjoying the second fastest pharmaceutical product launch in history. Early estimates of $500 million in annual sales were way too conservative. Celebrex is now likely to generate $1.5 to $2 billion in product sales in 1999. Analyst earnings estimates will have to go up for Monsanto as a result of this. The increased cash flow from Celebrex will help Monsanto de-leverage. A lot of investor skepticism with Monsanto stems from the company's aggressive acquisition program to increase its presence in the ag-biotech market. These acquisitions coupled with high levels of internal research and development spending have depressed earnings. Starting in fiscal 2000, Monsanto has tremendous earnings leverage. Both debt and staff reductions coupled with a payback on recent R&D expenditures will set the stage for earnings growth going forward. It has been almost a year since American Home Products offer for Monsanto. Over the last year, Monsanto has hit a blockbuster with Celebrex and is closer to realizing the fruits of its recent investments. Yet, Monsanto lacks scale in the pharmaceutical industry to go it alone. In other segments of the life-sciences market, there are tremendous synergies with other industry players that could result in a more profitable operation. Bottom Line: As the outlook for Monsanto continues to improve, its value to other industry players will increase. Whether Monsanto decides to sell its Searle pharmaceutical division and merge its other life sciences assets with Dupont or another player, shareholders will be rewarded. What is clear is that Monsanto has shed $13 billion in market value since its deal with American Home Products fell apart. Management is under pressure to restore this value, and they will. Analyst: Eric Singer Updated 3/11/99 at $48.88. Recommended 11/16/98 at $40.13.