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

To: BigKNY3 who wrote (7503)	4/23/1999 6:23:00 PM
From: BigKNY3	Read Replies (1) \| Respond to of 9523

Briefing.Com on MRK and Big Pharma BigKNY3 MERCK & CO. (MRK) 77 7/8. Value investors can now actually take a look at a big cap, industry leading drug company. Before the open Friday, Merck (MRK) reported first quarter profits of $0.54 per share. Not surprisingly, this was right in line with expectations, as drug companies and Merck in particular, are know for stable and predictable earnings trends. Also not surprisingly, this represented solid per share earnings growth of 15% on a year-over-year basis from the year-ago $0.47, and revenues rose 24% from the year-ago quarter. A very good report. What is surprising is that MRK now trades at about the same price/earnings multiple as the S&P 500. Historically, MRK has had a higher multiple due to strong, steady growth, and its leading position. With today's earnings report, however, MRK now trades at 35.5 times trailing twelve month earnings. The S&P trades at 36 times trailing as-reported earnings, based on yesterday's close and complete fourth quarter as-reported earnings. MRK stock has been a long-term steady performer, but it has come off its high of 87 3/8 of late March. Drugs have fallen out of fashion in recent trading sessions and that entire sector has sagged as rotation from defensive stocks such as these into cyclical stocks has occurred. Yet, drugs remain a growth industry as much as a "safe" sector expected to perform well even if global economies have trouble. There are always concerns about what new drugs are coming down the pipeline, but MRK has always been good at development. The press release also points out that MRK had solid volume gains in both established as well as new products. Business is good. So, MRK now actually trades at about the same valuation as the overall market. Value investors, as well as growth investors, can finally take a look at the drug sector and MRK. It is worth considering.