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Eli Lilly and Company Message Board

  • hightechmaster hightechmaster Feb 25, 1998 2:42 PM Flag

    A Few Shared Thoughts

    LLY continues to prove it is a stable, solid, terrifically well managed, research-oriented pharma, and the stock price behavior reflects this.

    LLY seems to have an intermediate floor around 63, a more solid floor at 59-60, a short term top around 65.5, maybe 66+. Long term, we feel a much higher number is likely, esp. when Synercid catches fire.

    (Newcomers to LLY - please ignore the recent mish-mash about personnel issues. It's either sour grapes or short-sellers, not usually seen on this very sophisticated board. LLY is a class act.)

    Here's a cautionary note. There is an interesting scenario unfolding. It's "possible" we may get a pop toward 9000 in the coming week or so (I personally am not predicting this, however), but in early to mid-MARCH, earnings warnings will put a drag on the market, followed by more drag in April when the actuals come out. It's likely the drugs will dip with the entire market, then bob back up due to safe haven investing by institutionals.

    Incidentally, I mentioned RP a few days ago and it swung from 63 to 65.5. We were in and out this week but like it very much, long term. RP is a good stock for quick trades but also has great long term potential as a Monsanto wanna-be. You can read my comments on the RP board.

    Our current near-term interest lies in MERK (MRK). An analyst recently described MRK as a "research juggernaut." A terrific pipeline and a darling of the institutionals. They often run to MRK when the rest of the market crashes.

    MRK is a high flyer, a momentum stock, VERY risky and volatile in here, often swings with the market which is bad, but getting ready to split, which is good. We believe it will split this spring, 3 for 1. April is a key month.

    Watch and see if we're right, but please don't invest based on our comments (or anything else you read on a stock message board). Do your own research and charting and read the news.

    We trade a lot, and don't mind sharing occasionally what we're doing or thinking about - if this is valuable, we'll continue to post once in awhile. If not, we won't.

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    • I think that there is NO possibility for this to happen. It is not a diseaset that a person can self-diagnose, and a person can decide how much they need to be taking to achieve clinical benefit.

    • Hightechmaster, I'll ask another way. What Tonto said to the Lone Ranger when they faced certain death. "What do you mean We paleface? <<g>>

    • Hightechmaster, What do you mean "WE"? Do you have a mouse in your pocket? <<g>>

    • Tagmet went over the counter when it went-off patent (I used to work for SB too). Why not Prozac? I can just imagine the commercial spot during NYPD Blue .....

    • Well, you had me until you described MRK's pipeline as "terrific" and the company as a "research juggernaut". I've been over
      MRK's pipeline more than a few times recently and don't see a thing that warrants that kind of excitement. The COX-2 product might
      have been big, but my sources tell me it's a molecule that Searle chose to pass on in lieu of their COX-2 and may be subject to
      patent infringement. Singulair is the third drug into a class that few physicians have embraced as the answer to asthma.
      After those two which aren't going to be able to make up the lost patent business, there's not much to go on. Sorry I didn't have some MRK lately to cash in on this unwarranted run-up, but I sure don't see it as a long-term play. My money's on LLY and PFE.
      Take the profits on MRK and run...

      P.S.- All the MRK-ies are scattering now that the board didn't deliver on the split they all anticipated. Take a look at the MRK thread - you've never seen so many "Our stock is great. How soon will it split?" memos... To me, the lack of substantive information is a reflection of where MRK is headed long-term... Stingo22

      • 1 Reply to stingo22
      • Stingo,

        I appreciate your response to my comments on MRK, very thoughtful and I agree that MRK's short term prospects are not terrific (you're right - time for profit-taking after the recent run-up), although I still believe this will become a safe haven along with LLY et. al. in March/April and the split will be a price-booster.

        Here is a news item that supports my view concerning MRK's research position:

        S&P affirms Merck & Co ratings
        Thursday, February 26, 1998 11:28 AM

        NEW YORK, Feb 26 - Standard & Poor's today assigned its triple-'A' rating to Merck & Co. Inc.'s $500 million senior notes due 2028, which are being drawn down from a Rule 415 shelf registration.

        Standard & Poor's affirmed its triple-'A' senior debt and corporate credit ratings and its 'A-1'-plus commercial paper ratings on the company. The rating actions reflect the company's cash generation in excess of ongoing needs derived from its leading position in highly profitable pharmaceutical markets.

        Merck has a well-diversified position in the pharmaceutical field, with nine products attaining an annual sales rate of more than $500 million.

        Strong cash flow from these and other high-margined products fund one of the industry's largest new product efforts, with research and development spending at an annual rate in excess of $1.7 billion.

        Merck is benefiting from the increasing contributions of its newer products, including cardiovasculars Zocor, Cozaar, and Hyzaar; osteoporosis treatment Fosamax; and the HIV inhibitor Crixivan.

        This, together with additional product introductions, mitigates concern regarding the loss of patent protection on a number of other important drugs in the next several years.

        Product prospects are aided by the establishment of joint ventures with other companies to enhance Merck's pharmaceutical research,consumer marketing, and participation in the vaccine and animal health fields.

        Through Merck-Medco Managed Care, a manager of pharmacy benefits that attempts to contain the overall cost of disease treatment,
        Merck aims to bolster its relationship with employers, insurers, and other large third-party drug purchasers.

        Overall performance for Merck remains strong, with returns on cash-adjusted capital above 45%.

        OUTLOOK: STABLE

        Merck's conservative financial policy, evidenced by cash and investments that exceed debt, contributes to its ability to execute large share repurchase programs without affecting its credit quality, Standard & Poor's said.

    • Highttechmaster:

      Please continue to post.




      Thanks,
      Lazarre











    • I have had pfe since split in 7-97, and have done very well this stock.
      Plan to purchase more drug stock, and have been watching lly and mrk.
      Appreciate your comments and insight on these two stocks.

    • Does your daddy know you're playing with his computer?.....George

 
LLY
63.78-0.59(-0.92%)Jul 25 4:00 PMEDT

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