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

To: Doug who wrote (1213)	5/12/1999 11:59:00 AM
From: Racso	Read Replies (2) \| Respond to of 1580

I use relative strength analysis (RSI) to estimate overbought/oversold conditions. RSI compares price changes for advancing periods against changes for declining periods. The time frame for this analysis is subjective, I prefer the last 14 trading days. On this basis, the Amex Pharma Index still looks undersold relative to other sectors although we have seen some minor recovery in names such as LLY. Expected 99-00 earnings growth for the top pharma stocks [LLY, MRK, PFE, SGP, WLA] ranges between 13-22% with 99 P/Es between 26-38X. This bunch, therefore, trades at around 65% to 120% premium over such growth rates. You can argue that they are not cheap, but earnings growth is quite steady, they are viable companies and, again, given their oversold conditions, should have a near term recovery. I hope this helps.