PFE

FAQ: Why Doesn’t the ‘Percentage Undervalued/Overvalued’ Match Up to the Actual Discount/Premium to Valuentum’s Fair Value Estimate of the Company?

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We view the intrinsic value of a firm as a range, not a single point estimate. So instead of us saying that a company is worth exactly $55 per share, for example, instead we’d say it is worth between $50 (low end) and $60 per share (high end) — think of this range as our margin of safety. We use a margin of safety due to the inherent uncertainty of predicting with absolute precision a firm’s future free cash flow stream — a firm’s future free cash flows determine our estimate of the company’s intrinsic value, and the future is not known yet. As a result, the ‘percentage undervalued/overvalued’ (as shown on our 16-page reports) is calculated by comparing the firm’s current price with the … Read more

FAQ: How Is Your Best Ideas Portfolio Doing This Year?

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At Valuentum, we task ourselves with a tall order. While most investment newsletters compare themselves to a market benchmark, we go one step further. We want to deliver positive returns to you, our subscriber, year after year, in addition to outperforming the market benchmark. Below, we outline a table that shows the outperformance we provided to our members since the time they joined.  So, for example, if you joined as a member on April 13, 2012 our Best Ideas portfolio has offered 3.8 percentage points of outperformance. Or, if you joined on July 13, 2011, our Best Ideas portfolio has offered 22 percentage points of outperformance. Importantly, did you know that, according to Advisor One, only 13% of hedge funds are beating the S&P … Read more

AstraZeneca Is Not Immune to Patent Cliff

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On Thursday, AstraZeneca (click ticker for report: ) posted difficult third-quarter results as the loss of exclusivity on several brands (namely Seroquel IR) and a couple divestitures drove revenue 15% lower. Core earnings per share declined 8%, while reported earnings per share dropped 50%. Still, management reiterated its full-year 2012 financial targets for earnings per share between $6.00 and $6.30 per share, and we don’t expect to make a material change to our fair value estimate at this time. The headline numbers were poor. US revenues dropped 19% in the third quarter, as a result of the loss of exclusivity of Seroquel IR, while revenue in the rest of the world (ROW) fell 12% during the period. The company noted … Read more

Pfizer Reports Decent Third-Quarter Results; Loss of Exclusivity on Blockbuster Drug Lipitor Concerning

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Pfizer (PFE) reported strong third-quarter results Tuesday that showed decent top-line growth thanks to favorable foreign exchange and solid income expansion due to excellent cost controls, which offset product losses of exclusivity. We are maintaining our fair value estimate. Pfizer’s top line jumped 7%, which was driven almost entirely by favorable foreign exchange (international revenue growth was 15%; 4% operational with the balance forex). US revenues continue to decline and also fall as a percentage of total revenue (now 40%, was 44%). Operationally, Pfizer experienced the strongest growth in nutrition, animal health (due to the addition of legacy King products), and consumer healthcare.  Revenue from its largest segment, Primary Care, was essentially flat, while sales from its second-largest segment, Specialty … Read more

Looking for a Pullback to Pick Up Johnson & Johnson’s Shares

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This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/278789-looking-for-a-pullback-to-pick-up-johnson-and-johnsons-shares As long-time followers of Johnson & Johnson (click ticker for report: ) know, the firm is a steady, established company that has pursued somewhat of a defensive strategy in light of the global economic situation, which continues to muddle along in the US. J&J has pulled back on capital expenditures and R&D, while cutting overhead expenses, amounting to material operating savings. Operating margins have improved from about 26.6% in 2008 to over 27.5% in 2010, and we think there is further room for expansion in coming years. We believe these operating improvements to be a low risk measure to improve the bottom line, and with expansion into international markets, the firm should … Read more

Which Sectors Are Leading the Market Higher? And Why Is This Important?

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Missed the ’13 Most Important Steps to Understand the Stock Market’? Click here. Demand academic evidence regarding the efficacy of the Valuentum process? Click here. Tobias J. Moskowitz and Mark Grinblatt documented the “strong and prevalent momentum effect in industry components of stock returns which accounts for much of the individual stock momentum anomaly” in their scholarly article published in the Journal of Finance, ‘Do Industries Explain Momentum’ (download here; stable link here; updated by Fraulo and Nguyen here). Moskowitz and Grinblatt also concluded that “industry momentum investment strategies, which buy stocks from past winning industries and sell stocks from past losing industries, appear highly profitable.” Such findings are consistent with the ‘Case for the Valuentum Style of Investing,’ and … Read more