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Table Of Contents Table Of ContentsTable Of Contents
February 6, 2012 / 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 5Health Care Sector 6-7Biotechnology 8-9Health Care Distributors 10-11Health Care Equipment 12-13Health Care Facilities 14-15Health Care Services 16-17Managed Health Care 18-19Pharmaceuticals 20-21Relative Earnings & P/E: Health Care 22-23Profit Margin 24Earnings Growth 25Earnings Growth Spreads 26Pricing 27
Figure 1.
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14200
300
400
500
2/3
S&P 500 HEALTH CARE
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
650
700
2/3
S&P 500 HEALTH CARE EQUIPMENT(BAX BCR BDX BSX CFNwi HSP ISRGMDT STJ SYK VAR ZMH)
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 140
200
400
600
800
1000
1200
14002/3S&P 500 BIOTECHNOLOGY
(AMGN BIIB CELG GENZ GILD)
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 140
50
100
150
200
250
2/3
S&P 500 HEALTH CARE FACILITIES(THC)
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14100
150
200
250
300
350
400
2/3
S&P 500 HEALTH CARE DISTRIBUTORS(ABC CAH MCK PDCO)
200-day moving average
Source: Standard and Poor’s Corporation.
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1480
120
160
200
240
280
320
360
400
440
480
520
560
2/3
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S&P 500 HEALTH CARE SERVICES(DGX DVA ESRX LH MHS)
- S&P 500 Health Care -
Page 1 / February 6, 2012 / Analyst’s Handbook: Health Care www.yardeni.com
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Figure 2.
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1450
100
150
200
250
300
350
400
450
500
550
600
650
2/3
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
2/3
S&P 500 PHARMACEUTICALS_________________________ABT AGN BMY BRL FRX JNJ LLYMRK MYL PFE SGP WPI WYE
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- S&P 500 Health Care (cont) -
Page 2 / February 6, 2012 / 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
2/3
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
2/3
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
2/3
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
2/3
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
2/3
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
2/3
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S&P 400 HEALTH CARE SERVICES______________________________AHG CVD LNCR OCR PPDI
- S&P 400: Health Care -
Page 3 / February 6, 2012 / 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
8002/3S&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
2/3
S&P 400 MANAGED HEALTH CARE______________________________HNT
- S&P 400 Health Care (cont) -
Page 4 / February 6, 2012 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
-10
0
10
20
Figure 5.S&P 500 Large Cap
All Sectors
-20
-10
0
10
20
10.5
S&P 400 MidCap
-20
-10
0
10
20
11.7
S&P 600 SmallCap
-10-505
10152025
4.1
Health CareSector
-10-505
10152025
12.0
-10
0
10
20
30
40
50
-30
-10
10
30
50
70
14.2Biotechnology
-30
-10
10
30
50
70
29.8
-30
-10
10
30
50
70
9.5
-10
0
10
20
30
4.4
Health CareDistributors
-10
0
10
20
30
13.2
-10
0
10
20
30
10.0
-25
-15
-5
5
15
25
10.3Health CareEquipment
-25
-15
-5
5
15
25
11.0
-25
-15
-5
5
15
25
10.0
-50
-30
-10
10
30
16.4
Health CareFacilities
-50
-30
-10
10
30
8.5
-50
-30
-10
10
30
11.0
-30
-20
-10
0
10
20
30
11.9Health CareServices
HC Supplies
Health CareTechnology
-30
-20
-10
0
10
20
30
2.4
-30
-20
-10
0
10
20
30
8.6
-15
-5
5
15
25
8.2
-20
0
20
40
60
80
1.5
Figure 11.S&P 500 LargeCap
ManagedHealth Care
-20
0
20
40
60
80
16.1
S&P 400 MidCap
-20
0
20
40
60
80
8.8
S&P 600 SmallCap
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2012
-30
-10
10
30
50
-1.4Pharmaceuticals
Source: Standard & Poor’s Corporation.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2012
-30
-10
10
30
50
5.2
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2012
-30
-10
10
30
50
3.8
yardeni.com
- Health Care: S&P Sector and Cap, Year-to-Date -
Page 5 / February 6, 2012 / 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
2/3
yardeni.com
S&P 500 HEALTH CARE INDEX*
* Ratio scale.
200-day moving average
Figure 6.
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
Jan
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 7.9 4.6
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 7.
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
Jan
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 8.
- Health Care Sector -
Page 6 / February 6, 2012 / 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
Jan
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 9.
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
Jan
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 10.
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
Q3
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 11.
- Health Care Sector -
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Yardeni Research, Inc.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201475
225
375
525
675
825975112512751425
75
225
375
525
675
825975
112512751425 2/3
yardeni.com
S&P 500 BIOTECHNOLOGY INDEX*(AMGN BIIB CELG GILD)
* Ratio scale.
200-day moving average
Figure 12.
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
105 Jan
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 9.0 10.9
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 13.
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
Jan
yardeni.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 14.
- Biotechnology -
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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
Jan
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 15.
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
Jan
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 16.
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
Q3
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 17.
- Biotechnology -
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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
2/3
yardeni.com
S&P 500 HEALTH CARE DISTRIBUTORS INDEX*(ABC CAH MCKPDCO)
* Ratio scale.
200-day moving average
Figure 18.
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
Jan
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 23.7 11.6
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 19.
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
Jan
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 20.
- Health Care Distributors -
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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
Jan
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 21.
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
Jan
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 22.
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
Q3
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 23.
- Health Care Distributors -
Page 11 / February 6, 2012 / 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
2/3
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 24.
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
Jan
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 9.6 9.7
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 25.
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
Jan
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 26.
- Health Care Equipment -
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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
Jan
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 27.
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
Jan
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 28.
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
Q3
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 29.
- Health Care Equipment -
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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
2/3
yardeni.com
S&P 500 HEALTH CARE FACILITIES INDEX*(THC)
* Ratio scale.
200-day moving average
Figure 30.
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
16Jan
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 32.2 13.9
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 31.
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
Jan
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 32.
- Health Care Facilities -
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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
Jan
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 33.
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
Jan
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 34.
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
Q3
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 35.
- Health Care Facilities -
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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
2/3
yardeni.com
S&P 500 HEALTH CARE SERVICES INDEX*(DGX DVA ESRX LH MHS)
* Ratio scale.
200-day moving average
Figure 36.
2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
15
25
35
45
5
15
25
35
45
Jan
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 16.7 14.5
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 37.
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
Jan
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 38.
- Health Care Services -
Page 16 / February 6, 2012 / 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
Jan
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 39.
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-30
-20
-10
0
10
20
30
40
50
-30
-20
-10
0
10
20
30
40
50
Jan
yardeni.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 40.
2003 2004 2005 2006 2007 2008 2009 2010 2011 20122
4
6
8
10
12
2
4
6
8
10
12
Q3
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 41.
- Health Care Services -
Page 17 / February 6, 2012 / 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
2/3
yardeni.com
S&P 500 MANAGED HEALTH CARE INDEX*(AET CI CVH HUM UNH WLP)
* Ratio scale.
200-day moving average
Figure 42.
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
Jan
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 11.1 4.3
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
Figure 43.
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
Jan
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 44.
- Managed Health Care -
Page 18 / February 6, 2012 / 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
Jan
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 45.
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
Jan
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 46.
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
Q3
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 47.
- Managed Health Care -
Page 19 / February 6, 2012 / 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
2/3
yardeni.com
S&P 500 PHARMACEUTICALS INDEX*(ABT AGN BMY FRXJNJ KG LLY MRXMYL PFE WPI)
* Ratio scale.
200-day moving average
Figure 48.
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
Jan
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 4.6 0.5
* Time-weighted average of current and next year’s consensus earnings estimates. Numbers above time line are annual growth rates.
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
35
40
5
10
15
20
25
30
35
40
Jan
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 50.
- Pharmaceuticals -
Page 20 / February 6, 2012 / 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
Jan
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 51.
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
Jan
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 52.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20125
10
15
20
25
5
10
15
20
25
Q3
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 53.
- Pharmaceuticals -
Page 21 / February 6, 2012 / 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 20130
100
200
300
400
500
600
700
800
900
1000
1100
0
100
200
300
400
500
600
700
800
900
1000
1100
Jan
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 54.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
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
Jan
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 55.
- Relative Earnings & P/E: Health Care -
Page 22 / February 6, 2012 / 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 2013-50
0
50
100
150
200
250
300
350
400
-50
0
50
100
150
200
250
300
350
400
JanS&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 56.
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20135
10
15
20
25
30
35
40
45
5
10
15
20
25
30
35
40
45
Jan
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 57.
- Relative Earnings & P/E: Health Care -
Page 23 / February 6, 2012 / 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
Q3
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 58.
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
Q3
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 59.
- Profit Margin -
Page 24 / February 6, 2012 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
Figure 66.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-5
0
5
10
15
20
25
30
35
-5
0
5
10
15
20
25
30
35
Jan
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
Jan
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 2013 2014-5
0
5
10
15
20
-5
0
5
10
15
20
Jan
S&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 25 / February 6, 2012 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
Figure 67.
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-20
-15
-10
-5
0
5
10
-20
-15
-10
-5
0
5
10
Jan
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 2013 2014-5
-4
-3
-2
-1
0
1
2
3
-5
-4
-3
-2
-1
0
1
2
3
Jan
Health Care LessS&P 500 LTEG*
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-7
-6
-5
-4
-3
-2
-1
0
1
2
3
-7
-6
-5
-4
-3
-2
-1
0
1
2
3
JanHealth 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 26 / February 6, 2012 / 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
Dec
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 68.
- Pricing -
Page 27 / February 6, 2012 / Analyst’s Handbook: Health Care www.yardeni.com
Yardeni Research, Inc.
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