Pfizer Only a Good Hold

Fri. July 25, 2008; Posted: 07:10 AM

Jul 25, 2008 (Zacks Investment Research via COMTEX) -- PFE | Quote | Chart | News | PowerRating -- We believe Pfizer Inc. (PFE) continues to face an uphill battle in growing its top line given the company's sheer size and lack of a significant pipeline. While near-term earnings growth will come in the form of cost-cutting and share repurchases, the company lacks a catalyst to increase revenues once Lipitor loses patent exclusivity. We expect the company to look to do a number of significant deals in the pharma and biotech industry in order to build the franchise and invest for the future. We believe there s currently little downside price risk given the valuation and rate the shares a Hold with a $21 price target. Given our current forecast, we expect Pfizer will only be able to manage 2% earnings growth through 2012. This is paltry, at best, especially given other names in the large-cap pharmaceutical space that offer growth in the double-digits. The wildcard with Pfizer and part of the reason for its cheap valuation, however, is the question of what they will do with their mountain of cash. We've been critical of the management relative to their historically poor track record of getting high-profile pipeline candidates to market and the fact that most of the $17 billion earmarked for acquisitions is still sitting on their balance sheet earning money market returns. We do believe, however, that Pfizer's management has a very keen eye on 2010 when Lipitor goes off patent outside of the U.S. We expect that, lacking a large mega-cap acquisition, they will be looking for a significant number of smaller ones to make up for the loss of exclusivity of their mega-blockbuster. While we're not convinced that Pfizer's strategy is enough to make the shares attractive from a long-term perspective, we believe there's little risk in holding the shares with a shorter-term focus. Jason Napodano, CFA, contributed to the report. Read the full analyst report on PFE

Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all today?s Analyst Blog entries.

For full details on Pfizer Inc (PFE) click here. Pfizer Inc (PFE) has Short Term PowerRatings of 5. Details on Pfizer Inc (PFE) Short Term PowerRatings is available at This Link.

More News: Market Updates | Stock Alerts | All Trading News | Stock Index

Archives

Feedback

Email Article Link

Close X

RELATED SITES

Please call 1-213-955-5858 ext. 1

Tax Relief Bank Levy Wage Garnishment

Disclaimer:

The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.

It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

The Connors Group, Inc.
15260 Ventura Blvd., Ste. 2200
Sherman Oaks, CA 91403

All analyst commentary provided on TradingMarkets.com is provided for educational purposes only. The analysts and employees or affiliates of TradingMarkets.com may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained on TradingMarkets.com is governed by the Terms and Conditions of Use. Please click the link to view those terms. Follow this link to read our Editorial Policy.