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Health Care Sector

Health Care Sector. Sang Mook Lee, Shinichiro Kido Bus-Fin 824 March 6, 2007. Health Care Sector - SIM holdings -. Industries of our Current Holdings : Pharmaceuticals HealthCare Equipment/Supplies Biotechnology Health Care Providers/Services

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Health Care Sector

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  1. Health Care Sector Sang Mook Lee, Shinichiro Kido Bus-Fin 824 March 6, 2007

  2. Health Care Sector - SIM holdings - Industries of our Current Holdings: Pharmaceuticals HealthCare Equipment/Supplies Biotechnology Health Care Providers/Services All of the above industries make up the majority of the Healthcare Sector Our current holdings are well diversified within our sector

  3. Market & Sector Overview • Total Healthcare market cap is approximately $2.3 trillion • Healthcare as a percentage of S&P500 • 12.15% • Third largest weighting in S&P500 • Behind Financials and Information Technology

  4. Health Care Sector Performance • 52 Week (-) • S&P 500: +13.50% • Health Care Sector: +7.85% • YTD (-) in 2006 • S&P 500: 13.62% • Health Care Sector: 5.78% • YTD and QTD (+) in 2007 • S&P 500: 2.24% • Health Care Sector: 3.37%

  5. Business Analysis • Defensive and relatively Matured • Performs independently of economic cycles and business factors • Beta for HealthCare Sector overall is 0.6 • External Factors • Aging Population, government regulation & trend towards consumer-oriented product • Risks • Earnings vulnerable to liability lawsuits, patent expirations, and development cost rising faster than sales

  6. SIM Current Holdings

  7. Recommendation • Sell all the shares of SYK 374bp  0bp • Buy MDT to 300bp 0bp  300bp • Increase TEVA by 74bp to 427bp 353bp  427bp

  8. Stryker Corporation Recommendation: SELL

  9. Stryker Corporation • Healthcare Equipment and Supplies Industry • Market Cap. 24.9 billion (S&P rating A), Revenue growth 15.7%, Net Income 23.8% at CAGR for 5 year. • Sales by line of business

  10. Stryker Stock Trend

  11. Stryker DCF

  12. Stryker Valuation

  13. Stryker Valuation

  14. Stryker Recommendation • Current Price $60.89 • Target Price – DCF valuation is lower than Current Price. (Almost limit for upward, now is the time for realizing capital gain) • Sell 374 bp to 0 bp.

  15. Medtronic Inc.MDT Recommendation: BUY

  16. MDT Corporation • Healthcare Equipment and Supplies Industry • Market Cap. 56.5 Billion (largest in the industry, S&P rating; AA-), Revenue growth 15.3%, Net Income 19.5% at CAGR for 5 year. • Sales by business segment

  17. MDT Stock Trend

  18. MDT Valuation

  19. MDT Valuation

  20. MDT DCF

  21. MDT Recommendation • Current price is $49.10 (on March 5, 2007) • Target price; • Buy to 300bp

  22. TEVA PharmaceuticalsTEVA Recommendation: BUY

  23. TEVA Pharmaceuticals • Drug Manufacturer – Generic (one of the largest makers and original drug) • Develops, manufactures, and markets generic and human pharmaceuticals, and active pharmaceutical ingredients, as well as animal health pharmaceutical products • Stock is an ADR • Sales by business segment

  24. TEVA Stock Trend

  25. TEVA Valuation

  26. TEVA Valuation

  27. TEVA DCF

  28. TEVA Recommendation • Currently price is $34.73 (on March 5, 2007) • Target price • Increase 74bp to 427bp

  29. Conclusion • Sell all the shares of SYK 374bp  0bp • Buy MDT to 300bp 0pb  300bp • Increase TEVA by 74bp to 427bp 353bp  427bp

  30. SIM Holdings after transaction

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