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Health Care / Pharma Q2-17 End Of Quarter Update

|Includes: Agilent Technologies Inc. (A), ABBV, ABC, ABT, AMGN, AZN, BAX, BAYRY, BCR, BDX, BMY, CAH, DGX, GILD, GSK, JNJ, LLY, MCK, MDT, MRK, NVO, NVS, PFE, PRGO, RHHBY, SNY, SYK, TEVA, TMO, ZBH, ZTS

This time last year I was morning the under performance of my Health Care stocks. I owned 7. Two were doing great: STJ - now merged with (ABT) and (NYSE:SYK) -- and the rest were not. I decided that I was under diversified - kicked one trick pony and over speculative (GILD) out - and added (BDX) and (MDT). I decided I needed to use some patience and keep on trying. But I was on the cusp of giving up and buying an ETF. But . .  the yield on the sector ETF was and is tiny - and the growth of the dividend on the EFT was and is highly volatile. There was too a of a cost in giving up.

This year - only one of my stocks is under performing (CAH) - and I know it is due to a temporarily dilutive acquisition.

Price changes are correlated to changes in earnings projections. I still lack a feel for the attributes that result in superior earnings projection accuracy. I want to favor stocks with lower dividend/EPS ratios and superior dividend growth inertia. I still look for growth at a reasonable yield.

I may be beating the sector average using rules of thumb metrics that tend to be winners. I invest with CAGR awareness . . .  while lacking confidence in my CAGRs. I am not harvesting the data on sufficient metrics that have proved themselves to be "predictive". In sum, I do not know what I am doing. But I am diversified and using decent rules of thumb.

Health Care / Pharma Stocks 06-30-17   Yield in the spreadsheet below is based on the Q2-17 dividend. Spreadsheet header abbreviations: Div = dividend; EPS = earnings per share; LTM = last twelve months; YTD = year to date. The dividend to EPS ratio is a measure of dividend safety. At this point in time, companies that pay dividends once per year have had their payouts divided by four and encoded in this data as if they paid a quarterly dividend. AZN pays two unidentical dividends per year. I take the sum of those dividends and divide by four to get a run rate dividend per quarter. The last four columns measure the percentage change in the 2017 EPS projection; the change in the price target since the beginning of the year; the change in the dividend since Q2-16; and the average yearly change in the dividend since Q2-14. On 4-23 BDX announced that it will acquire Bard for $317.00 per share in cash and stock.



Div Current Div/ Div/                Percent Change                 
Company and ticker    Price /Quarter Yield EPS17 EPS18 Price Pr+Div EPS17 EPS18 Target Div 1yr Div 3yr
Agilent Technologies (A) 59.31 0.132 0.89 23.8% 21.0% 30.18 30.76 2.78 3.72 24.72 14.78 11.90
AbbVie Inc. (ABBV) 72.51 0.640 3.53 46.4% 39.1% 15.79 17.84 0.36 0.61 3.26 12.28 15.16
AmerisourceBergen Corporation (ABC) 94.53 0.365 1.54 24.9% 23.1% 20.90 21.83 1.74 -1.40 9.07 7.35 16.00
Abbott Laboratories (ABT) 48.61 0.265 2.18 42.9% 38.1% 26.56 27.94 2.07 3.35 2.99 1.92 6.45
Amgen Inc. (AMGN) 172.23 1.150 2.67 37.2% 36.4% 17.80 19.37 -0.64 -0.78 0.46 15.00 23.70
AstraZeneca PLC (AZN) 34.09 0.342 4.01 73.9% 72.4% 24.78 27.28 0.54 -10.00 0.00 -2.29 -0.76
Baxter International Inc. (BAX) 60.54 0.160 1.06 28.2% 24.9% 36.54 37.26 6.07 5.33 12.39 23.08 -10.30
Bayer AG (OTCPK:BAYRY) 129.87 0.730 2.25 32.7% 30.4% 24.54 25.94 6.32 -0.31 12.07 3.55 0.83
CR Bard Inc. (BCR) 316.11 0.260 0.33 8.8% 8.0% 40.71 40.94 3.51 3.36 23.70 8.33 7.40
Becton, Dickinson and Company (BDX) 195.11 0.730 1.50 30.9% 28.2% 17.86 18.74 -0.84 -1.33 5.51 10.61 10.23
Bristol-Myers Squibb Company (BMY) 55.72 0.390 2.80 53.2% 51.1% -4.65 -3.32 -1.68 -9.50 -8.56 2.63 2.70
Cardinal Health, Inc. (CAH) 77.92 0.462 2.37 34.5% 35.5% 8.27 9.55 -10.98 -21.42 -4.23 2.90 10.58
Quest Diagnostics (DGX) 111.16 0.450 1.62 32.4% 30.8% 20.96 21.94 1.83 1.92 24.64 12.50 10.97
Gilead Sciences Inc. (GILD) 70.78 0.520 2.94 26.3% 28.1% -1.16 0.29 -30.95 -31.26 -18.48 10.64 6.65
GlaxoSmithKline PLC (GSK) 43.12 0.710 6.59 99.3% 96.3% 11.97 15.66 3.62 6.50 -1.45 -3.53 3.65
Johnson & Johnson (JNJ) 132.29 0.840 2.54 47.3% 43.6% 14.83 16.28 -0.56 2.25 4.09 5.00 6.27
Eli Lilly and Company (LLY) 82.30 0.520 2.53 50.6% 47.8% 11.90 13.31 0.24 -0.68 5.07 1.96 2.00
McKesson Corporation (MCK) 164.54 0.280 0.68 8.9% 9.2% 17.15 17.55 -0.16 -3.19 6.38 0.00 5.56
Medtronic Inc. (MDT) 88.75 0.460 2.07 40.0% 37.2% 24.60 25.89 0.66 -1.98 6.88 6.98 14.91
Merck & Co. Inc. (MRK) 64.09 0.470 2.93 48.8% 45.0% 8.87 10.46 -0.26 1.46 3.00 2.17 2.22
Novo Nordisk A/S (NVO) 42.89 0.203 1.89 35.8% 33.1% 19.60 20.73 1.35 -1.21 4.56 10.96 -0.47
Novartis AG (NVS) 83.47 0.576 2.76 49.0% 46.1% 14.59 16.17 -2.89 -12.59 -6.39 -13.74 -5.13
Pfizer Inc. (PFE) 33.59 0.320 3.81 50.0% 46.7% 3.42 5.39 -2.66 -4.86 -0.27 6.67 7.17
Perrigo Company PLC (PRGO) 75.52 0.160 0.85 15.0% 12.6% -9.26 -8.88 -43.24 -37.79 -27.13 10.34 15.13
Roche Holding AG (OTCQX:RHHBY) 31.80 0.250 3.14 52.4% 49.3% 11.46 13.21 -1.04 0.00 2.25 0.00 -3.01
Sanofi (SNY) 47.91 0.275 2.29 34.5% 33.3% 18.47 19.83 7.43 1.54 2.13 -2.31 -5.46
Stryker Corporation (SYK) 138.78 0.425 1.22 26.5% 24.1% 15.83 16.54 0.31 0.00 12.22 11.84 11.70
Teva Pharmaceutical Industries (TEVA) 33.22 0.340 4.09 29.3% 29.6% -8.36 -6.48 -14.86 -14.34 -31.53 -0.00 -0.67
Thermo Fisher Scientific, Inc (TMO) 174.47 0.150 0.34 6.5% 5.9% 23.65 23.86 -0.32 0.20 6.83 0.00 0.00
Zimmer Biomet Holdings, Inc. (ZBH) 128.40 0.240 0.75 11.2% 10.2% 24.42 24.88 -1.50 -1.05 0.48 0.00 3.03
Zoetis Inc. (ZTS) 62.38 0.105 0.67 18.0% 15.6% 16.53 16.93 -0.43 0.75 10.12 10.53 13.16
Average


2.22 36.1% 34.0% 16.09 17.35 -2.39
2.74 5.49 5.86
With the 10 Treasury at 2.301% and the sector average yield on Q2 dividends at 2.22% - the spread is -15 basis points.
The cap weighted ETF XLV has changed 14.94% year to date - with dividends included, its total return is 15.78%.
The yield on the XLV is 1.47% using the sum of LTM dividends - while LTM dividend growth is 7.27%.

Earnings Growth & P/E Ratios 06-30     Fiscal and calendar years are not in sync. ABC, BDX, CAH, MCK, MDT and PRGO began fiscal 2017 at least one quarter earlier than calendar 2017. Several stocks sell at valuations based on their drug pipelines - and short-term growth in EPS fails to capture a growth picture which is expected to come in 2018 and beyond. 2018 EPS projections are from NASDAQ. The rest of the projections are from Yahoo Finance. BAYRY and RHHBY still lacked 2018 projections - but since I need those numbers in multiple spreadsheets, I have provided temporary guesstimates for them.


        Earnings / Share               Earn. Growth             P/E Ratios           17 EPS Range    
Co. 2011 2012 2013 2014 2015 2016 2017 13-14 14-15 15-16 2014 2015 2016 High Low Range
A 295 312 288 304 174 198 222 5.56% -42.76% 13.79% 19.51 34.09 29.95 229 218 5.56%
ABBV 0 0 314 332 429 482 552 5.73% 29.22% 12.35% 21.84 16.90 15.04 557 547 2.07%
ABC 251 276 314 397 496 562 586 26.43% 24.94% 13.31% 23.81 19.06 16.82 590 584 1.07%
ABT 0 174 201 228 215 220 247 13.43% -5.70% 2.33% 21.32 22.61 22.10 252 244 3.64%
AMGN 533 651 760 870 1038 1165 1238 14.47% 19.31% 12.24% 19.80 16.59 14.78 1281 1210 6.09%
AZN 367 321 253 214 213 216 185 -15.42% -0.47% 1.41% 15.93 16.00 15.78 187 184 1.39%
BAX 234 246 254 266 138 196 227 4.72% -48.12% 42.03% 22.76 43.87 30.89 236 223 6.63%
BAYRY 0 688 745 799 763 810 892 7.25% -4.51% 6.16% 16.25 17.02 16.03 897 888 1.11%
BCR 640 657 578 840 908 1029 1179 45.33% 8.10% 13.33% 37.63 34.81 30.72 1191 1163 2.72%
BDX 533 537 581 625 716 859 944 7.57% 14.56% 19.97% 31.22 27.25 22.71 960 940 2.33%
BMY 228 199 182 185 201 283 293 1.65% 8.65% 40.80% 30.12 27.72 19.69 297 287 3.53%
CAH 267 321 373 384 438 524 535 2.95% 14.06% 19.63% 20.29 17.79 14.87 536 535 0.19%
DGX 285 392 400 410 477 515 556 2.50% 16.34% 7.97% 27.11 23.30 21.58 560 550 1.94%
GILD 181 171 201 809 1261 1157 792 302.49% 55.87% -8.25% 8.75 5.61 6.12 831 686 12.53%
GSK 325 353 373 296 232 266 286 -20.64% -21.62% 14.66% 14.57 18.59 16.21 296 270 9.77%
JNJ 500 510 552 597 620 673 710 8.15% 3.85% 8.55% 22.16 21.34 19.66 714 705 1.34%

        Earnings / Share               Earn. Growth             P/E Ratios           17 EPS Range    
Co. 2011 2012 2013 2014 2015 2016 2017 13-14 14-15 15-16 2014 2015 2016 High Low Range
LLY 441 339 415 278 343 352 411 -33.01% 23.38% 2.62% 29.60 23.99 23.38 415 407 2.27%
MCK 486 638 633 835 1111 1208 1254 31.91% 33.05% 8.73% 19.71 14.81 13.62 1240 1197 3.56%
MDT 337 346 375 382 428 437 460 1.87% 12.04% 2.10% 23.23 20.74 20.31 497 490 1.60%
MRK 377 382 349 349 359 378 385 0.00% 2.87% 5.29% 18.36 17.85 16.96 386 382 1.06%
NVO 102 142 167 162 201 222 226 -2.99% 24.07% 10.45% 26.48 21.34 19.32 230 219 4.95%
NVS 378 389 501 523 483 471 470 4.39% -7.65% -2.48% 15.96 17.28 17.72 478 461 3.61%
PFE 231 219 222 226 220 240 256 1.80% -2.65% 9.09% 14.86 15.27 14.00 260 254 2.50%
PRGO 401 499 561 639 773 759 428 13.90% 20.97% -1.81% 11.82 9.77 9.95 435 416 2.50%
RHHBY 140 162 156 156 175 184 191 0.00% 12.18% 5.14% 20.38 18.17 17.28 137 130 3.80%
SNY 348 319 340 345 282 314 318 1.47% -18.26% 11.35% 13.89 16.99 15.26 318 318 0.00%
SYK 372 407 423 473 512 580 642 11.82% 8.25% 13.28% 29.34 27.11 23.93 647 638 1.55%
TEVA 497 535 501 507 542 514 464 1.20% 6.90% -5.17% 6.55 6.13 6.46 490 418 14.01%
TMO 416 494 542 696 739 827 922 28.41% 6.18% 11.91% 25.07 23.61 21.10 925 920 0.60%
ZBH 480 530 575 606 690 796 854 5.39% 13.86% 15.36% 21.19 18.61 16.13 857 851 0.75%
ZTS 0 108 142 153 173 196 233 7.75% 13.07% 13.29% 40.77 36.06 31.83 236 230 3.06%

Sector Average




15.19% 6.87% 9.98% 20.95 20.98 18.13

3.48

I hope I have provided a sufficient narrative that you would not own one of these stocks "because Factoids' does". At the same time, I do own what I want to own.

Disclosure: I am/we are long ABC, ABT, AMGN, BDX, CAH, MDT, SYK, NVO.