IntelliAM AI Share Discussion Threads

[jeffian] 21/3/2003 10:44

Yesterday's announcement by Patricia Hewitt looks like the Govt's going to fudge the decision on de-regulation of chemists' licences. I think the market was being unnecessarily gloomy about the impact anyway, but the watering-down of the OFT proposals is bound to help sentiment for this one and my other pet stock in this sector, AUN. Due a re-rating?

Regards, Ian

[njp] 21/3/2003 00:56

The silly thing is, though, that INT, as a generics player, should thrive as health services move away from branded drugs. I can't see it being at all upset by any loosening of pharmacy licence restrictions, either. Still, as you say, it's damned by sector sentiment. This will change as the earnings come through.

[jeffian] 21/3/2003 00:00

I think it's the old "fear/greed" conundrum, NJP. When the market's in "fear" mode, it attaches undue weight to the negatives - in this case worries about European governments aiming to squeeze margins on drugs supplied to their health services and UK plans to loosen restrictions on chemists licences - and ignores the positives (unlimited consumer demand; huge growth market). A couple of years ago New Look shares crashed on a "profit warning" when earnings were still showing growth - just not at the level predicted/required by analysts - and have since recovered 400%+!! I agree with you that earnings are the key and are certainly the main driver of my investment decisions - sooner or later the market cottons on and the share price will follow as night follows day.

Regards, Ian

[njp] 20/3/2003 12:44

I've no idea, boadicea. The statement was very strong and the price is cheap. Someone on the PBB traders thread did short them from the off - braver than I am! - but the action over the day seemed to favour buyers, so I'm mystified. There is nothing wrong with INT as you can see from the numbers and this WILL come good given time, even in this desperate market.

[njp] 20/3/2003 11:17

Agree with you, jeffian. Still mystified, though, that such a recession proof sector should be so lowly rated in these depressed times. Double digit growth is not to be sniffed at and recovery must come in time. If we're looking forward to 2003 earnings, INT has a current p/e of around 8!

[jeffian] 20/3/2003 10:35

Have faith! I'm a fan of this sector - hold both INT and AUN - and the fact that the market doesn't rate (or doesn't believe) the growth story at the moment doesn't mean that they're right and we're wrong. Some of my best 'buys' have been solid earners in unfashionable/under-rated sectors (e.g. New Look in retail (Arcadia would have been even better!); almost any of the regional pub/brewery groups in 1999/2000) which have then been 'recognised' and re-rated by the market. I don't know when, but I reckon that will happen here in due course.

Regards, Ian

[boadicea] 19/3/2003 23:49

Well, it looked like a good move yesterday!!!
What was the problem at 9am today? Shorters moved back in? Impatient profit takers? Adverse press comment?
Can anyone give us a clue (other than too many sellers and not enough buyers)?

[keyboard] 19/3/2003 00:44

NJP:

Impressive increase in turnover. With
the double-digit prognosis coupled with INT being on the
acquisition-trail, I can't fault the strategy, given the
projected increase in the market share of generics, not only in
the UK but across the Channel as well.
At around 200p it offers really good value, I think!

[njp] 19/3/2003 00:24

keyboard

Agree INT is much better thought of than FER. And you're right about the upside. Read the outlook statement again. Confidently predicting double digit growth and a recession proof market. Don't see any credible threats short term either despite the rubbish reasons the shorters gave. With 2004 forecast eps of 24p plus, I'd have thought first stop 240p for INT.

[keyboard] 19/3/2003 00:16

Straightforward and positive results.
Should get back to 220p shortly imo.
The OFT has suggested that the government should ditch
the current restrictions on opening pharmacies. And if this
results in one being able to take one's prescriptions to
Sainsbury or Asda, it should create more competition and eventually
more sales of generics, which is what INT is all about.

Boadicea: You may have missed the boat at 190 but INT
is still on offer at historically relatively low prices.

NJP: I think there is more upside in this than meets the eye.
A better buy than the volatile FER, I think, though I can see the
potential there. However, FER is news-driven and does not seem to
promote itself, I think!

[boadicea] 18/3/2003 23:50

Thanks for the note, Keyboard. In fact I relented on the price and topped up a little below 195p on 12th March - which looks like a good move now. Hope to keep them for a year or two. I like their strategy and believe they deserve to do well.

[ddahj] 18/3/2003 09:40

Excellent long term holding

[njp] 18/3/2003 09:26

Rock solid results show just how ridiculous some of the recent shorting antics have been. With favourable comment INT ought to swiftly climb back to the 240 / 250p level - still only 10 times prospective earnings.

[njp] 10/3/2003 09:55

Copied this from the Alliance Unichem results. Further confirmation that there's nothing wrong with Intercare's sector. Prospects continue to look healthy.

Generic prescribing continues to increase, particularly in the UK and The
Netherlands, reducing wholesale turnover growth as more expensive brands come
off patent and are replaced by cheaper generic medicines which typically offer
higher trading margins to us. Despite the lower sales growth, we have used our
market position to improve our rate of growth and expect to be able to continue
this success.

Parallel importing continues to increase in several markets across Europe,
despite manufacturers' efforts to curtail it through the implementation of quota
systems on products and the restriction of product supply in certain markets.
This growth is being encouraged in some markets by governments introducing or
maintaining economic incentives or regulations to increase the incidence of
dispensing of parallel imported products. Manufacturers' actions are subject to
ongoing legal challenges by industry associations across Europe, as they are
aimed at restricting free trade within the European Union. Overall, however,
trade in parallel imports is limited'.

[boadicea] 28/2/2003 23:45

Polishing my buying boots for this one. Missed it at 190p a week or two back but looks like another chance is coming. Trouble is I'm feeling a bit mean these days and look for it going a bit lower than perhaps it will.
Good luck to all other watchers!

[keyboard] 27/2/2003 11:56

NJP:

So many quality stocks are at historically ridiculously low
prices, and if, as Jeffian says,
one is an investor, now is th time to buy, add or accumulate
'quality' stocks. The pessimism is overdone, and we don't live in
a Japanese type environment, which, I personally believe, is one
of the reasons that the markets there have not recovered in over a decade.
The only drawback is most 'investors' unlike 'shorters' probably don't have as much liquidity as they would like or prefer, as their funds are already tied
up - catch 22 situation. But INT, I concur, is a stock to add on the dips, if one can do so!

[njp] 27/2/2003 11:45

jeffian

You're right, of course. And in 3 months or so I'll have the cash to take advantage if the price is still on the floor. I'm just somewhat annoyed at placing a relatively small spread bet too early! Longer term I have no worries about INT whatsoever.

[jeffian] 27/2/2003 10:37

A feature of 'capitulation' - or whatever you call that feeling of relentless despair/gloom after a prolonged bear period - is that everything gets marked down regardless of fundamentals. So rather than beating ourselves up over the reasons why "a very sound company like INT can be pushed so far below fair value", it may well be that there are none and there will be a time when you look back and cannot believe you could buy such stock so cheaply. Day does follow night. Buy low/sell high.

If you're a short-term trader, I have no idea whether this will go down further - it's all just market sentiment. But if you're an investor with real cash to tuck away, this market is offering plenty of buying opportunities for stockpickers. This is one IMHO as, I believe, is Alliance Unichem (AUN) in the same field.

Regards, Ian

[njp] 27/2/2003 01:10

keyboard

No blame at all. Just seems that you can't lose going short at the moment, though I do find it galling that a very sound company like INT can be pushed so far below fair value on pretexts that are completely wide of the mark. First reason for the shorting frenzy was the OFT pharmacy report (can anybody tell me how many pharmacies INT own?) and then it was supposed to be a squeeze on margins (don't know where that came from - maybe a follow through from the OFT saga - but INT's emphasis is precisely in the generic, parallel import, cheap sourcing area). INT aren't over burdened with debt, generate good and growing profits and pay a goodish dividend and my understanding is that they should meet analysts forecasts of 21.5p eps for 2002. Forecast for 2003 is around 24p which puts them currently on a derisory forward p/e of little more than 8.

I've no trouble with people making money where they can in these markets but, with all I know about the company, it should be sitting up around the 230p / 240p mark, so I'm loathe to join in the fun and short from £2. Given the lack of buying interest around, it seems that I'd be a lot richer if I said stuff what I know about the company and just jumped on their bandwagon.

Still, I suppose it they shove the price back below the 190p level it does give us a bargain pre results.

[gerrrard125] 26/2/2003 23:08

Highly acquisitive companies have a good long term record.

Discuss..

[keyboard] 26/2/2003 20:51

NJP:

In present market conditions can you really blame anyone for
taking quick profits.
I must confess, the way things are going one is inclined to get
in and out of all the stocks one holds, until the situation has
stabilised, which won't happen until the war situation is clarified,
one way or another. At the moment the political situation is clouding
the whole market and all stocks, good or bad, are suffering, sometimes
dragging the whole sector with them. We live in uncertain times.

[njp] 26/2/2003 19:04

Shorters getting excited again. I'd love them to get caught out on this one but it seems they're onto a safe bet 'cos of lack of buyers. Looks like there's bargains to be had in a few days time, which could net a nice short term return if the results are as I expect them to be.

[keyboard] 19/2/2003 00:01

Boadicea:

I don't see why you think it "has got away"! Quite the contrary imo.
NJP and I thought 210-220 would be a good price to buy,
add or accumulate, and when it got to below 190, I decided
to return, and even with the rise over the last two days,
I think it is still worth considering, as historically 220-260
has been its range in quieter times. I might seriously
consider buying a few more before it gets to 205.

[njp] 18/2/2003 11:31

boadicea

So many shares gain one day and give it back the next that I guess we're all much, much more cautious in our comments. 200p is also a big psychological barrier. If it holds ground we may see it power ahead in the week before results - world events permitting. Results should well justify the current price and, as superrod says, there's a nice divvy as well.

[superrod] 17/2/2003 21:57

said a dozen times and will say again.......this is an ace share. good prospects and a DIVI which cushions the fall. had 20k once for £1.11. wish i had the gift of hindsight