To conclude, deep value investors with long time horizons have to be taking an interest in the large-cap pharma space given the low valuations, the cash flow generation and the healthy dividends. The key question remains, What is the catalyst for the shares? Value investors often buy cheap stocks based on attractive valuations and then wait for the catalysts to appear. With large-cap pharma and Merck today, you are collecting attractive dividend yields to wait for that catalyst.
Still, we are not long Merck, or any other pharma, at this point. Earnings growth looks like it will continue to come from headcount reductions and cost rationalization, rather than top-line growth.
Pharmaceuticals CELG Products Show Strength 5/8/2008 10:24 AM EDT The company reported EPS of 36 cents on total revenue of $461 million.
At the time of publication, Gilmartin had no positions in the stocks mentioned, although positions may change at any time.Brian Gilmartin, CFA, founded Trinity Asset Management (TAM) in 1995, where he is currently a portfolio manager. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Gilmartin appreciates your feedback; click here to send him an email.
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