Replies to post #145313 on Biotech Values

[zipjet]

Rocky

I see no reason that stocks growing at 6-7% (double the GNP growth rate over any long term period) should have a p/e over 8.

Biomaven

It's a big mistake in my view to look at a p/e (or its inverse, the earnings yield) divorced from the prevailing long term interest rate.

Rocky, in context (your statement to which Bio responded), I agree with Bio. All that is missing from Bio's statement to be complete is the future growth rate which you supplied.

Stocks are worth much more than a PE of 8 IF it is really growing* at 6-7% (long term) with 10yrT's under 2%. That is simple math.



ij

* Real grow of earnings and free cash flows.