Biovail (BVF) is Canada's largest drugmaker (which isn't saying much). This company had a very severe setback in early August when a court ruled that a potential competitor for BVF's best-selling drug would not be infringing BVF's patent. The stock plunged from $21 to $14.50 on the news.
Four months later, the stock is all the way back to $21 as they are essentially turning themselves into an income trust and paying out 85% or more of earnings as dividends.
Read my last post very carefully which obviously you haven't. I accept your earnings estimates figures as accurate but they are not always a good indication of the stock price. Is that too dificult for you to understand or are you just interested in your own words and advice?
Your quote: "The stock did not initially go down after the Q3 earnings because of any Torcetrapib overhang - it went down due to what appeared to be a very pessimistic management forecast for Q4 earnings".
This statement is not entirely accurate. The financial services group UBS downgraded PFE stock as soon as the third quater earnings report came out because of its concerns about the systolic BP elevation reports associated with torecetrapib and the delay in the market introduction of Exeubera. The downgrade was reported in the news items on the PFE web site near or shortly after the report day on Oct 19,so check it out yourself. In hindsight, it turns out that the torecetrapib concern was indeed justified since this drug belly flopped shortly afterwards. The analysts already had concerns over torecetrapib even before Kindle's remarks on report day and no matter what he said, the analysts were not going to be that impressed with the nine cents earnings surprise. In hindsight, although he didn't realize it at the time, it was a very prudent move of Kindle to keep his mouth shut on the Oct 19 report day regarding torecetrapib or matters could have even been worse.
I am not trying to punch holes in your future earnings forecast predictions. They are probably reasonably accurate. I am simply trying to make the point that earnings forecasts, even if they turn out to be true and accurate as indeed yours was on Oct 19, do not necessarily correlate with the price of the stock, which is the only thing I care about. The stock price of the pharmaceutical companies depends mainly on the performance of its drug products, which include existing ones such as Lipitor as well as the experimental ones in the pipeline, such as torcetrapib. If there is a serious concern that occurs during an earnings report period over one of these drugs,particualry one that was as important to PFE future's growth as torcetrapib, the stock price will most likely go down even if the earnings target is exceeded as it indeed was on Oct 19. The stock price of PFE as well as all pharmaceutical companies ultimately depends on how effectively these companies delivery drugs that improve public health in the critical health related areas. That is the ultimate benchmark that ultimately determines the stock price of a pharmaceutical company and it may or may not correlate with meeting or exceeding future earnings targets. That is the only point I am trying to make and I am not casting dispersions on your damn future earnings figures which seem to be reasonably accurate! Incidentally, I am a whole lot less interested in your future earnings figures, as accurate as they may be, than I am about my concern that there may be other, heavily relied upon torcetrapib-like drugs in the PFE pipeline that could possibly flop. Obviously we all hope that this won't ever happen, but a succession of drug flops like torcetrapib would bring a company even, as large as PFE, to its knees and all the stock buybacks and favorable foreign exchange exchange rate conditions that you factor into your future earnings expectations won't save it.
In my opinion, PFE needs to re-invent itself also. I am convinced that this company, in spite of its $7 billion annual R&D budget, doesn't do a good job at all in bringing to market drugs in late stage development such as torcetrapib which is only one example of the very expensive PFE 'flops' that we have witnessed. I know that all big pharma companies have launching difficulties of their late stage development drugs from time to time but PFE has a particularly dismal record. It is basically a 'one-trick' pony, namely Lipitor, and PFE didn'd develop Lipitor. What are PFE's strengths? First of all its the richest pharmaceutical company in the world. Secondly it is very good at marketing and distributing drugs such as Lipitor and Celebrex which is another drug that it did not develop. Maybe what PFE should do is to trim its R&D staff severely and use those billions of dollars plus some of that other money that its holding for a rainy day to license promising drugs from the good biotech companies that are more nimble and have better track records than PFE in bringing drugs to market. Then PFE can use its very extensive marketing and distribution skills to get these drugs to the customer. I am aware that PFE is suppose to have some 'promising' drugs in its own pipeline but I have this very uncomfortable feeling that there are some more 'torcetrapibs' in that group, and if so, trying to bring those drugs to market might indeed be disastrous. The key to success here is to identify the correct diversity of needed drugs that will bring value
to the the company and reduce the extreme vulnerability that comes from being a 'one trick' pony. If PFE management has the ability to make prudent choices on what drugs to license, this may indeed be the best approach to getting the company and the PFE stock price back on track.
Here is a wound that never will heal, I know,
Being wrought not of a dearness and a death,
But of a love turned ashes and the breath
Gone out of beauty; never again will grow
The grass on that scarred acre, though I sow
Young seed there yearly and the sky bequeath
Its friendly weathers down, far Underneath
Shall be such bitterness of an old woe.
That April should be shattered by a gust,
That August should be levelled by a rain,
I can endure, and that the lifted dust
Of man should settle to the earth again;
But that a dream can die, will be a thrust
Between my ribs forever of hot pain.
Guess you'll get bent over just like PFE.>
You,re the expert on the get bent over, plus you,re a liar,
you claim to be short or long any time it is convenient to you.
I am neyther at this time, I think you just fooling you self with your lies.