PFE
#1
Posted 05 December 2006 - 07:50 AM
The stock sold off hard on bad news re: cholesterol drug in development was dropped due to failed clinical trials (and deaths). It wasn't a commercial product and the anti-cholesterol drug market is getting stagnant. So there is no immediate impact on financials, which are quite strong for PFE these days. Most observers bemoan lack of revenue growth potential at PFE.
Looking at a very long term chart, if I was going to buy something like a big pharma name for long term investment, it seems this would be a ideal entry point for PFE. I can't keep chasing precious metals stocks forever and I am slowly starting to think about deploying some LT money elsewhere over the next year. It is a defensive stock purchase and we'll see if it is timely.
Any thoughts out there??
cheers,
john
#2
Posted 05 December 2006 - 09:35 AM
Hi John,
My thoughts on all drug stocks is do not buy for dividends or long term growth. The reason is that there is great pressure on these companies to lower the cost of drugs to the public. When that happens, current profit that goes to dividends and RESEARCH, will be reduced.
Research for new drugs is their backbone for survival. IMO dividends will be cut and growth will be limited to actual new products placed on the market.
Yields are another story. I am an adviser to several Trust's and have sold all drug stocks for the above reasons. For good yields there are a number of places to go that have yields of 4% or more with growth and a pay-out ratio of 1.0 or less. Below is a chart from Carl's Decision Point web site listing only a few.
My best is a thinly traded stock, but the only game in its class, GNI 9.8% with tradable growth. When it declines just add more to the pile.
I have a vested interest in most of these.
Best to you, mss
A DOG ALWAYS OFFERS UNCONDITIONAL LOVE. CATS HAVE TO THINK ABOUT IT!!
#3
Posted 05 December 2006 - 09:46 AM
#4
Posted 05 December 2006 - 11:28 AM
Thanks for your comments. If I understand your comments correctly, you see no investment thesis for PFE or big pharma.
I can't comment on fundamentals, as I am from Missouri regarding the sector. I am aware of some of the issues facing the big pharma companies. I am simply looking at the pattern and the 7 year consolidation/correction PFE has undergone. It looks complete to me. The current decline appears to me to be simply an excuse to retest the lows of the last year.
I'm going to shove a tight stop at yesterday's entry and see what PFE decides to do in Dec. That is the top of the triangle you drew. My take is that the stock should not have sold below that $24.50 level, but did so on yesterday's opening low.
It'll be interesting to see what the stock does if there is a stock buy back announcement or dividend increase in the future. It would not surprise me to see PFE mgmt pull a lever here to set a floor price under the stock. They are likely to acquire in the future, and they will need their stock as currency.
Thanks again for your perspective. Your comments will keep me on my toes.
cheers,
john
#5
Posted 05 December 2006 - 01:48 PM
Edited by hiker, 05 December 2006 - 01:48 PM.
#6
Posted 05 December 2006 - 04:49 PM
That is correct. However, it may, and others, offer great swing/position trades down the road.Hi mss,
Thanks for your comments. If I understand your comments correctly, you see no investment thesis for PFE or big pharma.
cheers,
john
I believe your question was buying it based on LT and dividends, and therefore their are much better ops.
The buy back thought in interesting, and will factor that into my analysis.
BTW, I lived and worked in St. Louie for 5 years, so understand you comments.
Best to you,
mss
A DOG ALWAYS OFFERS UNCONDITIONAL LOVE. CATS HAVE TO THINK ABOUT IT!!
#7
Posted 05 December 2006 - 06:23 PM
Edited by hiker, 05 December 2006 - 06:25 PM.
#8
Posted 06 December 2006 - 08:19 AM
Edited by PorkLoin, 06 December 2006 - 08:19 AM.
#9
Posted 07 December 2006 - 05:46 AM
#10
Posted 10 December 2006 - 01:50 PM
Hi John,
Pfizer had the big move up into the double top in 1999 and 2000. I think a "Head and Shoulders" bottom for 2005 has already been compromised, and that a ton of buying power would be exhausted just filling that BIG recent gap.
I sure don't have a crystal ball, but when the money flow (CMF) has gotten up there, like it is now, it's meant a better time to sell than a time to buy since 2000.
To me, looks like a nice ABC up from the December low. 1-2, 1-2 would be majorly bullish, but that gap has me doubting such is in force. I think the daily chart says that 25.50 - 26.00 is stout resistance. Get through that and we'll see.
Longer-term, I'd like to buy on a test of 22 that didn't close below it significantly.
Best,
Doug