Pfizer Is A Fallen Angel? Beat Those Wings, Jeff
2 CommentsBy Ed Silverman // July 30th, 2008 // 7:39 am
File this under ‘been down so long, looks like up to me.’ The stock market column in BusinessWeek concludes Pfizer stock is an upswing after plummeting over the past 12 months, and the recent rise is no mere blip. Never mind the looming Lipitor patent expiration, the uncertain product pipeline and sagging Chantix sales, the mag defends the speculators quoted by writing this…
“Catalysts that could move Pfizer’s stock higher include strategic acquisitions, according to Birkelback. Such deals could widen the company’s portfolio of drugs and lessen the impact on earnings of the patent expiration of marquee cholesterol drug Lipitor in 2011. Should Pfizer release good news sometime soon about any of the drugs in its pipeline, greater focus by analysts and investors would certainly stoke the shares. And with its huge cash stash, estimated at $28 billion, the drugmaker could repurchase more shares, in addition to the $10 billion worth of stock it bought in 2007.”
“…There is no question that Pfizer’s shares are depressed, reflecting investors’ ho-hum attitude toward the drugmaker. But any positive news - on an acquisition or an exciting new product - will surely fire up the stock and provide it a nice lift. And then Wall Street’s wizards might start to remember why the pharma giant was considered a blue-chip name in the first place.”
OUR THOUGHT: Of course, a really big move in the stock may also lend greater impetus for doing a truly big deal, a concept that continues to divide decisionmakers at Pfizer’s highest levels. First, though, Pfizer has to actually do something substantive and not merely pretend to be a valuation play.
Justice in MI
Those of us who follow the roller-coaster approach to investing see the graphic as a good-looking curve. But what if it was the view from the perspective of one year, three years, five years? (I have no idea - haven’t looked it up).
But that’s how we in the roller-coaster school distinguish between a blip and a burp. I have a feeling BizWeek does it differently.
Stinky
A whole lot of ifs in the BW article. Stock price estimates should not be based on speculation as to whether a merger or new product will magically happen. The problem is that Pfizer’s current pipeline is running dry, and there is nothing on the horizon that can replace Lipitor. As far as strategic acquisitions pushing the company stock price up, that is unlikely for at least two reasons. 1 - When a company buys the another, that typically pushes the stock price of the larger company down and the price of the acquired company up. 2 - Pfizers track record for acquisitions hasn’t been all that great. They are still working out many kinks from their old deals.
Pfizer puff piece.