yardeni research, inc.jan feb mar apr may jun jul aug sep oct nov dec 2011-30-20-10 0 10 20 30 4.5...
TRANSCRIPT
Yardeni Research, Inc.
thinking outside the box
Table Of Contents Table Of ContentsTable Of Contents
October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
S&P 500 Health Care 1S&P 500 Health Care (cont) 2S&P 400: Health Care 3S&P 400 Health Care (cont) 4Health Care: S&P Sector and Cap, Year-to-Date 5-6Health Care Sector 7-8Biotechnology 9-10Health Care Distributors 11-12Health Care Equipment 13-14Health Care Facilities 15-16Health Care Services 17-18Managed Health Care 19-20Pharmaceuticals 21-22Relative Earnings & P/E: Health Care 23-24Profit Margin 25Earnings Growth 26Earnings Growth Spreads 27Pricing 28
Figure 1.
1998 2000 2002 2004 2006 2008 2010 2012 2014200
300
400
500
10/24
S&P 500 HEALTH CARE
1998 2000 2002 2004 2006 2008 2010 2012 2014200
250
300
350
400
450
500
550
600
650
700
10/24
S&P 500 HEALTH CARE EQUIPMENT(BAX BCR BDX BSX CFNwi HSP ISRGMDT STJ SYK VAR ZMH)
1998 2000 2002 2004 2006 2008 2010 2012 20140
200
400
600
800
1000
1200
1400
10/24
S&P 500 BIOTECHNOLOGY(AMGN BIIB CELG CEPH GENZ GILD)
1998 2000 2002 2004 2006 2008 2010 2012 20140
50
100
150
200
250
10/24
S&P 500 HEALTH CARE FACILITIES(THC)
1998 2000 2002 2004 2006 2008 2010 2012 2014100
150
200
250
300
350
400
10/24
S&P 500 HEALTH CARE DISTRIBUTORS(ABC CAH MCK PDCO)
200-day moving average.
Source: Standard and Poor’s Corporation.
1998 2000 2002 2004 2006 2008 2010 2012 201480
120
160
200
240
280
320
360
400
440
480
520
560
10/24
yardeni.com
S&P 500 HEALTH CARE SERVICES(DGX DVA ESRX LH MHS)
- S&P 500 Health Care -
Page 1 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
Figure 2.
1998 2000 2002 2004 2006 2008 2010 2012 201450
100
150
200
250
300
350
400
450
500
550
600
650
10/24
S&P 500 MANAGED HEALTH CARE(AET CI CVH HUM UNH WLP)
1998 2000 2002 2004 2006 2008 2010 2012 2014200
250
300
350
400
450
500
550
600
10/24
S&P 500 PHARMACEUTICALS_________________________ABT AGN BMY BRL FRX JNJ LLYMRK MYL PFE SGP WPI WYE
yardeni.com
- S&P 500 Health Care (cont) -
Page 2 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
Figure 3.
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14200
250
300
350
400
450
500
550
600
10/24
S&P 400 HEALTH CARE
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14225
275
325
375
425
475
525
575
625
675
725
10/24
S&P 400 HEALTH CARE EQUIPMENT_______________________________BEC CYTC EW EYE HB IMDC ISRG STEVAR VARI
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14300
400
500
600
700
800
900
1000
1100
10/24
S&P 400 BIOTECHNOLOGY_______________________AFFX CEPH CRL IVGN MATK MLNM PDLITECH VRTX
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1450
100
150
200
250
10/24
S&P 400 HEALTH CARE FACILITIES______________________________CYH LPNT TRI UHS WOOF
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14200
250
300
350
400
450
500
550
10/24
S&P 400 HEALTH CARE DISTRIBUTORS___________________________________HSIC
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1480
100
120
140
160
180
200
220
240
260
280
10/24
yardeni.com
S&P 400 HEALTH CARE SERVICES______________________________AHG CVD LNCR OCR PPDI
- S&P 400: Health Care -
Page 3 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
Figure 4.
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14100
200
300
400
500
600
700
800
10/24S&P 400 PHARMACEUTICALS_________________________MRX PRGO PRX SEPR VRX
200-day moving average.Source: Standard & Poor’s Corporation.
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 140
100
200
300
400
10/24
S&P 400 MANAGED HEALTH CARE______________________________HNT
- S&P 400 Health Care (cont) -
Page 4 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
-20
-10
0
10
20
-.3
Figure 5.S&P 500 LargeCap
All Sectors
-20
-10
0
10
20
-2.3
S&P 400 MidCap
-20
-10
0
10
20
-2.4
S&P 600 SmallCap
-10-505
10152025
6.5Health CareSector
-10-505
10152025
2.8
-20
-10
0
10
20
30
9.7
-10
10
30
50
70
19.4Biotechnology
-10
10
30
50
70
7.4
-10
10
30
50
70
46.8
-10
0
10
20
30
12.7Health CareDistributors
-10
0
10
20
30
9.0
-10
0
10
20
30
7.1
-25
-15
-5
5
15
25
-1.0Health CareEquipment
-25
-15
-5
5
15
25
1.7
-25
-15
-5
5
15
25
-6.8
-50
-30
-10
10
30
-25.0
Health CareFacilities
-50
-30
-10
10
30
-20.5
-50
-30
-10
10
30
5.1
-30
-20
-10
0
10
20
30
-17.0
Health CareServices
HC Supplies
Health CareTechnology
-30
-20
-10
0
10
20
30
-.3
-30
-20
-10
0
10
20
30
-8.6
-15
-5
5
15
25
-2.8
-10
0
10
20
30
4034.5
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2011
-30
-20
-10
0
10
20
30
-8.2
Life SciencesTools & Services
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2011
-30
-20
-10
0
10
20
30
4.5
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2011
-30
-20
-10
0
10
20
30
-6.9
yardeni.com
- Health Care: S&P Sector and Cap, Year-to-Date -
Page 5 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
-10
10
30
50
70
30.4
Figure 6.S&P 500 LargeCap
ManagedHealth Care
-20
0
20
40
60
7.5
S&P 400 MidCap
-20
0
20
40
6047.9
S&P 600 SmallCap
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2011
-30
-10
10
30
50
6.4Pharmaceuticals
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2011
-30
-10
10
30
50
28.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2011
-30
-10
10
30
50
5.6
yardeni.com
- Health Care: S&P Sector and Cap, Year-to-Date -
Page 6 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
130
180
230
280
330
380430480530
80
130
180
230
280
330
380430480530
10/24
yardeni.com
S&P 500 HEALTH CARE INDEX*
* Ratio scale.
200-day moving average
Figure 7.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
3540
5
10
15
20
25
30
3540
Oct
yarden
i.com
S&P 500 HEALTH CARE OPERATING EARNINGS PER SHARE(analysts’ average forecasts, ratio scale)
Consensus Forecasts__________________
Annual estimates
12-month forward*
0809
10 1112
9.7 15.4 8.9 14.4 13.5 9.9 9.3 7.8 9.6 11.1 8.2 7.3 14.0 8.1 0.9 10.3 7.1 5.5
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 8.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20126
10
14
18
22
26
30
34
6
10
14
18
22
26
30
34
Oct
yardeni.com
S&P 500 HEALTH CARE VALUATION
P/E*
S&P 500 P/E*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 9.
- Health Care Sector -
Page 7 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012.7
.8
.9
1.0
1.1
1.2
1.3
1.4
1.5
.7
.8
.9
1.0
1.1
1.2
1.3
1.4
1.5
Oct
yardeni.com
S&P 500 HEALTH CARE SECTOR RELATIVE VALUATION
P/E Relative to S&P 500*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 10.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-25
-20
-15
-10
-5
0
5
10
15
20
-25
-20
-15
-10
-5
0
5
10
15
20
Oct
yardeni.com
S&P 500 HEALTH CARE NET REVISIONS*(% estimates up less down)
* Three-month moving average of 12-month forward consensus expected operating earnings per share using mid-month consensus forecast.
Figure 11.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20124
6
8
10
12
14
16
4
6
8
10
12
14
16
Q2
yardeni.com
S&P 500 HEALTH CARE PROFIT MARGIN(trailing 4-quarter EPS, percent) Operating Profit Margin___________________
S&P 500 Composite
Sector
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 12.
- Health Care Sector -
Page 8 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201275
225
375
525
675
82597511251275
75
225
375
525
675
825975
11251275
10/24
yardeni.com
S&P 500 BIOTECHNOLOGY INDEX*(AMGN BIIB CELGCEPH GILD)
* Ratio scale.
200-day moving average
Figure 13.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
25
45
65
85
105
5
25
45
65
85
105Oct
yarden
i.com
S&P 500 BIOTECHNOLOGY OPERATING EPS(analysts’ average forecasts, ratio scale)
Consensus Forecasts__________________
Annual estimates
12-month forward*
0809
1011 12
24.7 25.0 14.8 20.1 24.3 0.3 4.7 17.0 34.4 12.8 31.2 29.5 18.0 15.0 10.4 12.5 6.8 8.6
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 14.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
35
40
45
50
55
60
65
70
5
10
15
20
25
30
35
40
45
50
55
60
65
70
Octyardeni.com
S&P 500 BIOTECHNOLOGY VALUATION
P/E*
S&P 500 P/E*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 15.
- Biotechnology -
Page 9 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012.50
.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
.50
.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
Oct
yardeni.com
S&P 500 BIOTECHNOLOGY RELATIVE VALUATION
P/E Relative to S&P 500*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 16.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-40
-30
-20
-10
0
10
20
30
40
50
60
70
-40
-30
-20
-10
0
10
20
30
40
50
60
70
Oct
yardeni.com
S&P 500 BIOTECHNOLOGY NET REVISIONS*(% estimates up less down)
* Three-month moving average of 12-month forward consensus expected operating earnings per share using mid-month consensus forecast.
Figure 17.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
5
10
15
20
25
30
35
40
0
5
10
15
20
25
30
35
40
Q2
yardeni.com
S&P 500 BIOTECHNOLOGY PROFIT MARGIN(trailing 4-quarter EPS, percent)
Operating Profit Margin____________________
S&P 500 Composite
Industry
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 18.
- Biotechnology -
Page 10 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201295
145
195
245
295
345
395
95
145
195
245
295
345
395
10/24
yardeni.com
S&P 500 HEALTH CARE DISTRIBUTORS INDEX*(ABC CAH MCKPDCO)
* Ratio scale.
200-day moving average
Figure 19.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20124
8
12
16
20
24
2832
4
8
12
16
20
24
2832
Oct
yarden
i.com
S&P 500 HEALTH CARE DISTRIBUTORS OPERATING EARNINGS PER SHARE(analysts’ average forecasts, ratio scale)
Consensus Forecasts__________________
Annual estimates
12-month forward* 08
0910 11
12
18.4 17.3 3.7 11.5 -11.7 2.7 29.0 34.7 18.8 3.9 -8.6 11.4 12.4 13.2 1.0 -7.7 22.1 12.2
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 20.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
35
5
10
15
20
25
30
35
Oct
yardeni.com
S&P 500 HEALTH CARE DISTRIBUTORS VALUATION
P/E*
S&P 500 P/E*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 21.
- Health Care Distributors -
Page 11 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012.50
.75
1.00
1.25
1.50
1.75
2.00
2.25
.50
.75
1.00
1.25
1.50
1.75
2.00
2.25
Oct
yardeni.com
S&P 500 HEALTH CARE DISTRIBUTORS RELATIVE VALUATION
P/E Relative to S&P 500*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 22.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-50
-40
-30
-20
-10
0
10
20
30
40
-50
-40
-30
-20
-10
0
10
20
30
40
Oct
yardeni.com
S&P 500 HEALTH CARE DISTRIBUTORS NET REVISIONS*(% estimates up less down)
* Three-month moving average of 12-month forward consensus expected operating earnings per share using mid-month consensus forecast.
Figure 23.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
2
4
6
8
10
0
2
4
6
8
10
Q2
yardeni.com
S&P 500 HEALTH CARE DISTRIBUTORS PROFIT MARGIN(trailing 4-quarter EPS, percent)
Operating Profit Margin____________________
S&P 500 Composite
Industry
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 24.
- Health Care Distributors -
Page 12 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201280
180
280
380
480
580
680
80
180
280
380
480
580
680
10/24
yardeni.com
S&P 500 HEALTH CARE EQUIPMENT INDEX*(BAX BCR BDX BSX CFN COV EW HSPISRG MDT STJ SYK VAR ZMH)
* Ratio scale.
200-day moving average
Figure 25.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
15
25
35
45
55
5
15
25
35
45
55
Oct
yarden
i.com
S&P 500 HEALTH CARE EQUIPMENT OPERATING EARNINGS PER SHARE(analysts’ average forecasts, ratio scale)
Consensus Forecasts__________________
Annual estimates
12-month forward*
08 0910 11
12
20.9 10.4 7.0 9.5 16.1 3.5 8.1 18.3 12.1 27.3 13.9 -6.4 4.3 13.8 8.1 6.2 9.4 10.8
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 26.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
35
5
10
15
20
25
30
35
Oct
yardeni.com
S&P 500 HEALTH CARE EQUIPMENT VALUATION
P/E*
S&P 500 P/E*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 27.
- Health Care Equipment -
Page 13 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012.8
1.0
1.2
1.4
1.6
1.8
.8
1.0
1.2
1.4
1.6
1.8
Oct
yardeni.com
S&P 500 HEALTH CARE EQUIPMENT RELATIVE VALUATION
P/E Relative to S&P 500*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 28.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-40
-30
-20
-10
0
10
20
30
-40
-30
-20
-10
0
10
20
30
Oct
yardeni.com
S&P 500 HEALTH CARE EQUIPMENT NET REVISIONS*(% estimates up less down)
* Three-month moving average of 12-month forward consensus expected operating earnings per share using mid-month consensus forecast.
Figure 29.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
5
10
15
20
0
5
10
15
20
Q2
yardeni.com
S&P 500 HEALTH CARE EQUIPMENT PROFIT MARGIN(trailing 4-quarter EPS, percent)
Operating Profit Margin____________________
S&P 500 Composite
Industry
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 30.
- Health Care Equipment -
Page 14 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201220
70
120
170
220
270
20
70
120
170
220
270
10/24
yardeni.com
S&P 500 HEALTH CARE FACILITIES INDEX*(THC)
* Ratio scale.
200-day moving average
Figure 31.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
Oct
yarden
i.com
S&P 500 HEALTH CARE FACILITIES OPERATING EARNINGS PER SHARE(analysts’ average forecasts, ratio scale)
Consensus Forecasts__________________
Annual estimates
12-month forward*
08
09
10
11
12
18.3 13.0 -25.4 9.4 -4.5 1.8 26.6 22.6 -33.2 -23.2 15.6 -22.2 +/- neg -/+ 109.5 19.6 16.6
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 32.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
5
10
15
20
25
30
Oct
yardeni.com
S&P 500 HEALTH CARE FACILITIES VALUATION
P/E*
S&P 500 P/E*
P/E not available from November 2007 to March 2008 and fromDecember 2008 to July 2009 because earnings were negative.
P/E capped at 25.
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 33.
- Health Care Facilities -
Page 15 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012.4
.6
.8
1.0
1.2
1.4
1.6
1.8
.4
.6
.8
1.0
1.2
1.4
1.6
1.8
Oct
yardeni.com
S&P 500 HEALTH CARE FACILITIES RELATIVE VALUATION
P/E Relative to S&P 500*
Relative P/E capped at 1.5 and not availableduring 2007-2009 when earnings were negative.
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 34.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-50
-25
0
25
50
75
-50
-25
0
25
50
75
Oct
yardeni.com
S&P 500 HEALTH CARE FACILITIES NET REVISIONS*(% estimates up less down)
* Three-month moving average of 12-month forward consensus expected operating earnings per share using mid-month consensus forecast.
Figure 35.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-4
-2
0
2
4
6
8
10
12
-4
-2
0
2
4
6
8
10
12
Q2
yardeni.com
S&P 500 HEALTH CARE FACILITIES PROFIT MARGIN(trailing 4-quarter EPS, percent)
Operating Profit Margin____________________
S&P 500 Composite
Industry
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 36.
- Health Care Facilities -
Page 16 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
2003 2004 2005 2006 2007 2008 2009 2010 2011 201295
145
195
245
295
345
395
445495545
95
145
195
245
295
345
395
445495545
10/24
yardeni.com
S&P 500 HEALTH CARE SERVICES INDEX*(DGX DVA ESRX LH MHS)
* Ratio scale.
200-day moving average
Figure 37.
2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
15
25
35
45
5
15
25
35
45
Oct
yarden
i.com
S&P 500 HEALTH CARE SERVICES OPERATING EARNINGS PER SHARE(analysts’ average forecasts, ratio scale)
Consensus Forecasts__________________
Annual estimates
12-month forward*
08
09
1011
12
na 9.0 18.1 19.3 21.8 20.4 15.3 20.3 18.0 16.8
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 38.
2003 2004 2005 2006 2007 2008 2009 2010 2011 20128
10
12
14
16
18
20
22
24
8
10
12
14
16
18
20
22
24
Oct
yardeni.com
S&P 500 HEALTH CARE SERVICES VALUATION
P/E*
S&P 500 P/E*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 39.
- Health Care Services -
Page 17 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012.8
.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
.8
.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Oct
yardeni.com
S&P 500 HEALTH CARE SERVICES RELATIVE VALUATION
P/E Relative to S&P 500*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 40.
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-20
-10
0
10
20
30
40
50
-20
-10
0
10
20
30
40
50
Octyardeni.com
S&P 500 HEALTH CARE SERVICES NET REVISIONS*(% estimates up less down)
* Three-month moving average of 12-month forward consensus expected operating earnings per share using mid-month consensus forecast.
Figure 41.
2003 2004 2005 2006 2007 2008 2009 2010 2011 20122
4
6
8
10
12
2
4
6
8
10
12
Q2
yardeni.com
S&P 500 HEALTH CARE SERVICES PROFIT MARGIN(trailing 4-quarter EPS, percent)
Operating Profit Margin___________________
S&P 500 Composite
Industry
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 42.
- Health Care Services -
Page 18 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201270
170
270
370
470
570
670
70
170
270
370
470
570
670
10/24
yardeni.com
S&P 500 MANAGED HEALTH CARE INDEX*(AET CI CVH HUM UNH WLP)
* Ratio scale.
200-day moving average
Figure 43.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20124
14
24
34
44
5464
4
14
24
34
44
5464
Oct
yarden
i.com
S&P 500 MANAGED HEALTH CARE OPERATING EARNINGS PER SHARE(analysts’ average forecasts, ratio scale)
Consensus Forecasts__________________
Annual estimates
12-month forward*
0809 10
11 12
10.3 13.4 15.2 -4.2 13.9 21.1 -16.6 55.2 32.4 32.4 21.7 19.0 21.1 -8.6 6.7 22.4 7.6 7.2
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 44.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
5
10
15
20
25
30
Oct
yardeni.com
S&P 500 MANAGED HEALTH CARE VALUATION
P/E*
S&P 500 P/E*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 45.
- Managed Health Care -
Page 19 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012.4
.6
.8
1.0
1.2
1.4
1.6
.4
.6
.8
1.0
1.2
1.4
1.6
Oct
yardeni.com
S&P 500 MANAGED HEALTH CARE RELATIVE VALUATION
P/E Relative to S&P 500*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 46.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-40
-30
-20
-10
0
10
20
30
40
50
-40
-30
-20
-10
0
10
20
30
40
50
Oct
yardeni.com
S&P 500 MANAGED HEALTH CARE NET REVISIONS*(% estimates up less down)
* Three-month moving average of 12-month forward consensus expected operating earnings per share using mid-month consensus forecast.
Figure 47.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122
3
4
5
6
7
8
9
10
11
12
13
2
3
4
5
6
7
8
9
10
11
12
13
Q2
yardeni.com
S&P 500 MANAGED HEALTH CARE PROFIT MARGIN(trailing 4-quarter EPS, percent)
Operating Profit Margin___________________
S&P 500 Composite
Industry
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 48.
- Managed Health Care -
Page 20 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201275
150
225
300
375
450
525600
75
150
225
300
375
450
525600
10/24
yardeni.com
S&P 500 PHARMACEUTICALS INDEX*(ABT AGN BMY FRXJNJ KG LLY MRXMYL PFE WPI)
* Ratio scale.
200-day moving average
Figure 49.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
3540
5
10
15
20
25
30
3540
Oct
S&P 500 PHARMACEUTICALS OPERATING EARNINGS PER SHARE(analysts’ average forecasts, ratio scale)
Consensus Forecasts__________________
Annual estimates
yarden
i.com
12-month forward*
08
09 10 1112
10.3 16.3 13.3 15.7 14.9 12.9 11.5 1.1 8.4 9.1 2.6 3.8 13.0 8.0 -3.9 8.0 4.2 1.4
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 50.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
35
40
5
10
15
20
25
30
35
40
Oct
yardeni.com
S&P 500 PHARMACEUTICALS VALUATION
P/E*
S&P 500 P/E*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 51.
- Pharmaceuticals -
Page 21 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012.6
.8
1.0
1.2
1.4
1.6
1.8
.6
.8
1.0
1.2
1.4
1.6
1.8
Oct
yardeni.com
S&P 500 PHARMACEUTICALS RELATIVE VALUATION
P/E Relative to S&P 500*
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data. Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 52.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-25
-20
-15
-10
-5
0
5
10
15
20
25
-25
-20
-15
-10
-5
0
5
10
15
20
25
Oct
yardeni.com
S&P 500 PHARMACEUTICALS NET REVISIONS*(% estimates up less down)
* Three-month moving average of 12-month forward consensus expected operating earnings per share using mid-month consensus forecast.
Figure 53.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
5
10
15
20
25
0
5
10
15
20
25
Q2
yardeni.com
S&P 500 PHARMACEUTICALS PROFIT MARGIN(trailing 4-quarter EPS, percent)
Operating Profit Margin___________________
S&P 500 Composite
Industry
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
Figure 54.
- Pharmaceuticals -
Page 22 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201250
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
900
950
1000
50
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
900
950
1000
Oct
S&P 500 FORWARD EARNINGS:* HEALTH CARE(1997=100)
Health Care
Biotechnology
Health Care Equipment
Managed Health Care
* 12-month forward consensus expected operating earnings per share. Time-weighted average of current and next year’sconsensus forecasts.Source: Thomson Financial.
yardeni.com
Figure 55.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
5
10
15
20
25
30
35
40
45
50
55
60
65
70
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
Oct
S&P 500 P/E RATIOS:* HEALTH CARE
Health Care
Biotechnology
Health Care Equipment
Managed Health Care
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data.Source: Thomson Financial.
yardeni.com
Figure 56.
- Relative Earnings & P/E: Health Care -
Page 23 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-75
-50
-25
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
375
-75
-50
-25
0
25
50
75
100
125
150
175
200
225
250
275
300
325
350
375 OctS&P 500 FORWARD EARNINGS:* HEALTH CARE(1997=100)
Health Care
Health Care Facilities
Pharmaceuticals
Health CareDistributors
* 12-month forward consensus expected operating earnings per share. Time-weighted average of current and next year’sconsensus forecasts.Source: Thomson Financial.
yardeni.com
Figure 57.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
30
35
40
45
5
10
15
20
25
30
35
40
45
Oct
S&P 500 P/E RATIOS:* HEALTH CARE
Health Care
Health Care Facilities(P/E capped at 40)Pharmaceuticals
Health Care Distributors
* Price divided by 12-month forward consensus expected operating earnings per share using mid-month data.Source: Thomson Financial.
yardeni.com
Figure 58.
- Relative Earnings & P/E: Health Care -
Page 24 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
Q2
S&P 500 OPERATING PROFIT MARGINS: HEALTH CARE(trailing 4-quarter EPS, percent)
Health Care Sector
Biotechnology
Health Care Equipment
Managed Health Care
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
yardeni.com
Figure 59.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-4
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
-4
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
Q2
S&P 500 OPERATING PROFIT MARGINS: HEALTH CARE(trailing 4-quarter EPS, percent)
Health Care Sector
Health Care Facilities
Pharmaceuticals
Health Care Distributors
Sources for all charts: Standard & Poor’s Corporation, Thomson Financial, and Haver Analytics.
yardeni.com
Figure 60.
- Profit Margin -
Page 25 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
Figure 61.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-5
0
5
10
15
20
25
30
35
-5
0
5
10
15
20
25
30
35
Oct
S&P 500 HEALTH CARE vs. S&P 500(percent)
STEG*_____
S&P 500 Health CareS&P 500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
5
10
15
20
Oct
LTEG*_____
S&P 500 Health CareS&P 500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-5
0
5
10
15
20
-5
0
5
10
15
20
OctS&P 500 Health Care__________________
STEG*
LTEG*
yardeni.com
* Short-term earnings growth: 12-month forward consensus expected earnings growth. Long-term earnings growth: 5-year forward consensus expected earnings growth.Source: Thomson Financial.
- Earnings Growth -
Page 26 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
Figure 62.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-20
-15
-10
-5
0
5
10
-20
-15
-10
-5
0
5
10
Oct
S&P 500 HEALTH CARE VS S&P 500(percentage points)
Health Care Less S&P 500 STEG*
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-3
-2
-1
0
1
2
3
-3
-2
-1
0
1
2
3
Oct
Health Care LessS&P 500 LTEG*
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-7
-6
-5
-4
-3
-2
-1
0
1
2
3
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
Oct
Health Care STEG*Less Health Care LTEG*
yardeni.com
* Short-term earnings growth: 12-month forward consensus expected earnings growth. Long-term earnings growth: 5-year forward consensus expected earnings growth.Source: Thomson Financial.
- Earnings Growth Spreads -
Page 27 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 120
1
2
3
4
5
6
7
8
9
10
11
12
0
1
2
3
4
5
6
7
8
9
10
11
12
Sep
CONSUMER PRICES(yearly percent change)
Prescription Drugs_______________
CPI
PCED*
* Personal consumption expenditures deflator.Source: US Department of Commerce, Bureau of Economic Analysis and US Department of Labor,Bureau of Labor Statistics.
yardeni.com
Figure 63.
- Pricing -
Page 28 / October 25, 2011 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
Copyright (c) Yardeni Research, Inc. 2011. All rights reserved. The informationcontained herein has been obtained from sources believed to be reliable, but is notnecessarily complete and its accuracy cannot be guaranteed. No representation orwarranty, express or implied, is made as to the fairness, accuracy, completeness, orcorrectness of the information and opinions contained herein. The views and the otherinformation provided are subject to change without notice. This report and the othersposted on www.yardeni.com are issued without regard to the specific investmentobjectives, financial situation, or particular needs of any specific recipient and are not tobe construed as a solicitation or an offer to buy or sell any securities or related financialinstruments. Past performance is not necessarily a guide to future results. Companyfundamentals and earnings may be mentioned occasionally, but should not be construedas a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts,estimates for any and all markets should not be construed as recommendations to buy,sell, or hold any security--including mutual funds, futures contracts, and exchange tradedfunds, or any similar instruments.
The text, images, and other materials contained or displayed on any Yardeni Research,Inc. product, service, report, email or website are proprietary to Yardeni Research, Inc.and constitute valuable intellectual property. No material from any part ofwww.yardeni.com may be downloaded, transmitted, broadcast, transferred, assigned,reproduced or in any other way used or otherwise disseminated in any form to any personor entity, without the explicit written consent of Yardeni Research, Inc. All unauthorizedreproduction or other use of material from Yardeni Research, Inc. shall be deemed willfulinfringement(s) of this copyright and other proprietary and intellectual property rights,including but not limited to, rights of privacy. Yardeni Research, Inc. expressly reservesall rights in connection with its intellectual property, including without limitation theright to block the transfer of its products and services and/or to track usage thereof,through electronic tracking technology, and all other lawful means, now known orhereafter devised. Yardeni Research, Inc. reserves the right, without further notice, topursue to the fullest extent allowed by the law any and all criminal and civil remedies forthe violation of its rights.
The recipient should check any email and any attachments for the presence of viruses.Yardeni Research, Inc. accepts no liability for any damage caused by any virustransmitted by this company’s emails or website. Additional information available onrequest.