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Pfizer Inc. Message Board

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  • chlamydiapapiloma chlamydiapapiloma Oct 14, 2007 7:14 PM Flag

    MRK trounces PFE

    Is it also NO PROBLEM if you have to wait until Jan 2012 or 2013 or later, ie up to ten years after you first bought PFE in 2003?

    There's surely no guarantee that PFE will have reached your target of $31 by then. If it gains an average of a dollar a year from here, that will take until 2013.

    But more likely PFE will linger in the mid to low $20s until after Lipitor expiration, then fund managers will wait to see if the company can grow earnings absent megablockbusters.

    If its 2012 profits do indeed attain $2 per share, & earnings are forecast to grow at 5% annually over the next five years & you generously add in another 5% for dividend payout rate, at a PEG ratio of 1.0 for the two kinds of growth, appreciation & income together, then PFE should trade at a multiple of 10, for $20. If pharma should still carry a higher average PEG ratio at that time, then a P/E of 15 might be in order, for share price of $30.

    But even should you then cash out for $300,000, that's just a $200K profit, or 200% on the $100K to which you upped your "investment" in 2004, after up to ten years, for annual pre-tax, pre-cost gain of what, 15%?

    Way too low a return for such enormous risk from crazy overleverage & underdiversification, as Hotpanera has so wisely pointed out.

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