Time to load up on big Pharma???

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Ashland's picture
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P/E ratios on Pharma stocks are at historic lows. Long term winner or value trap?

Broker24's picture
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Ashland wrote:P/E ratios on Pharma stocks are at historic lows. Long term winner or value trap?
 
I still like PFE at a 5.5% yield.  You just have to believe.  Might take some time, but the "bargain" price might be gone before you know it.

Gordon Gekko's picture
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They have been a bargain for years but I am hearing a few smart people looking at them. The yield is 50% higher than a cd or money market, as are most bank stock yields.

Eyetattoo's picture
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Any new thoughts of PFE?  yields are still good but their pipeline out look doesn't seem too good.

troll's picture
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Broker24's picture
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6.2% yield as of today.  Unless they absolutely stink going forward, you are at least going to get that coupon.  And they've been raising the dividend for years.  They are cutting costs like crazy, outsourcing everything they can, and all of their separation costs (severance, etc.) will be behind them prior to ex-Lipitor date.
 
They have more compounds in Discovery right now than in any time in history.  I am guessing they will come out with a lot of new drugs over the next few years.  AND, I would wager that they buy someone (with a valuable compound).  Durg companies (especially PFE) are learning from the "blockbuster" drug hangover, that it makes more sense to go after volume rather than a few blockbuster drugs.  They ramped up the entire company for one drug, and now they are paying the consequences.
 
As far as people selling into the weakness, much of it is sotckholders tired of the stock price drifting lower and lower over time.  They aren't necessarily looking at the big picture.  They are looking at their own brokerage statement.  Also lot of employees selling.  Just wait until the stock gets into the 30's.  You will see some UNBELIEVABLE activity in this stock (since most stock options granted in the last 10 years are currently worthless right now).

troll's picture
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Broker24's picture
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joedabrkr wrote: Broker24 wrote:6.2% yield as of today.  Unless they absolutely stink going forward, you are at least going to get that coupon.  And they've been raising the dividend for years.  They are cutting costs like crazy, outsourcing everything they can, and all of their separation costs (severance, etc.) will be behind them prior to ex-Lipitor date.
 
They have more compounds in Discovery right now than in any time in history.  I am guessing they will come out with a lot of new drugs over the next few years.  AND, I would wager that they buy someone (with a valuable compound).  Durg companies (especially PFE) are learning from the "blockbuster" drug hangover, that it makes more sense to go after volume rather than a few blockbuster drugs.  They ramped up the entire company for one drug, and now they are paying the consequences.
 
As far as people selling into the weakness, much of it is sotckholders tired of the stock price drifting lower and lower over time.  They aren't necessarily looking at the big picture.  They are looking at their own brokerage statement.  Also lot of employees selling.  Just wait until the stock gets into the 30's.  You will see some UNBELIEVABLE activity in this stock (since most stock options granted in the last 10 years are currently worthless right now).I agree with much of what you're saying.  Just the same, if the stock drops another $1.25, you've lost a year's dividend.  Are you absolutely certain that it will not drop by another point or so?The divided, of course, is not guaranteed, either.  What do you think the stock would do if they cut the dividend in half to conserve capital?
 
You ain't kidding.  I can't guarantee anything.  If they cut the dividend, all bets are off.  That would be ominous sign #1.
 
However, if the stock drops another 1.25, and they maintain the dividend, and you don't sell, you really haven't "lost" anything.  I work for Jones - remember, buy and hold??  Joking aside, a bet on them maintaining a dividend is pretty strong.  They would be a great prospect for a 5 year investment window (or longer).  I wouldn't count on making much with them in the next two or three years.

troll's picture
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troll's picture
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Symbol
Description
Optionable
RecentPrice
Tech Attrib/ETF Score


ALO
Alpharma Inc.
Yes
25.720
5

AUXL
Auxilium Pharmaceuticals, Inc.
Yes
31.120
5

BNT
Bentley Pharmaceuticals, Inc.
Yes
15.450
5

DBR
WisdomTree International HealthCare Sector Fund
No
25.330
2.41

DRAX
DRAXIS Health Inc.
No
5.930
4

DRRX
Durect Corporation
Yes
4.590
4

ELN
Elan Corporation, plc (Ireland) ADR
Yes
27.090
5

EURX
Eurand N.V.
No
15.390
5

FBT
First Trust Amex Biotechnology Index Fun
Yes
23.600
3.09

HHP
HealthShares Orthapedic Repair
No
23.330
3.84

MATK
Martek Biosciences Corp
Yes
35.540
5

MBRK
MiddleBrook Pharmaceuticals, Inc.
Yes
3.650
3

PMC
Pharmerica Corporation
No
17.550
4

PRGO
The Perrigo Company
Yes
42.310
5

RDEA
Ardea Biosciences, Inc.
No
14.640
5

RIGL
Rigel Pharmaceuticals, Inc.
Yes
22.040
5

TEVA
Teva Pharmaceutical Industries Limited (Israel) AD
Yes
47.320
5

WCRX
Warner Chilcott Limited
Yes
17.510
5

< =.print = value=Print>

Seems to me Pharma should still be avoided.  But I would consider these names before PFE

troll's picture
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troll's picture
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And only down 45% (n/inc divs) since it went to a RS sell!!  It's on sale!!  RS doesn't work though, it's voodoo.

troll's picture
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Eyetattoo's picture
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Joined: 2008-03-29

I guess Im going to be keeping an eye on this one......from what I hear everything in their pipeline (thats worth anything) is going to take another 5-10 years before it gets past the FDA.  

Broker24's picture
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Joined: 2006-10-12

joedabrkr wrote: Broker24 wrote:
I wouldn't count on making much with them in the next two or three years.Then why not wait and buy them in 12 months?  Or wait for an even lower price?
 
Both are reasonable strategies.  But I am not sure how much lower PFE will go.  If I was going to buy, say 50K worth, I might DCA in over the next 6 months or so.  That at least gives you some protection and latitude.

new_indy's picture
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Joined: 2007-03-28

You know the dividend arguement is specious right?  Remember x-date?  If the stock stays flat or goes down what does the dividend actually gain you?  It is not a coupon, and therefore is not a direct bottom line gain.

troll's picture
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Joined: 2004-11-29

New 10 year low in after market trading on PFE today, if you liked it at $23 your gonna love it at $19.70

troll's picture
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Joined: 2004-11-29

From some reading I've done, might make sense to look at BMY. Solid cashflow, near term catalysts in the pipeline, 5.62% yield and a chart that looks like it might be bottomed out.

troll's picture
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pratoman wrote:From some reading I've done, might make sense to look at BMY. Solid cashflow, near term catalysts in the pipeline, 5.62% yield and a chart that looks like it might be bottomed out.
 
IF the chart holds here, maybe.  Technically still a ways from buying.

Dark Knight's picture
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Joined: 2008-01-30

So if it takes 5-10 years I take a 6% div (tax favored) that rises each year and then the stock goes up?  Sounds worth buying to me.

troll's picture
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Joined: 2004-11-29

The dividend for PFE must be accruing interest, it just keeps growing and growing...

troll's picture
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Joined: 2004-11-29

PFE dividend now over 7%!!!!

troll's picture
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troll's picture
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I think the dividend is accruing interest or something.  That has to be it.

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