Stockchase Opinions

Gordon Reid Pfizer Inc PFE-N COMMENT May 03, 2016

Just reported and had quite good earnings. They are reeling, of course, from the government decision to not allow the Allergan deal to go through. There is a lot of debate because the 2 companies were within the law, but the tax inversion issue is a big one, and the way it was done is leaving a bad taste in people’s mouths. Pfizer is just starting to move out of the issue of Lipitor coming off patent. It was a blockbuster drug before, but when it goes generic you see sales drop dramatically. Their pipeline has been building. This company has had basically flat revenues and earnings for 4 or 5 years, and is trading at about 20X earnings. A bit of a “show me” stock, and that goes for most pharmaceuticals. You are better off going into biotechs. Prices have come down quite dramatically, and are trading at cheaper multiples than Pharma drug companies. Have a look at Biogen (BIIB-Q) or Celgene (CELG-Q).

$33.700

Stock price when the opinion was issued

biotechnology pharmaceutical
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DON'T BUY

It's cheap, but for a reason. Sees no growth, despite a big acquisition. Consider Merck or Amgen for perhaps more growth.

HOLD

You'd have thought they'd be hit more by tariffs, as Trump hammers on that many drug components are made overseas. So the market must be thinking tariffs will benefit pharma, to explain why this name is up on such a tremendously down day. Keeping people guessing and on a knife's edge isn't a bug of the current US administration, it's a feature.

His healthcare investments focus on health management like UNH and medical devices.

DON'T BUY

Thinks dividend is safe, but may be challenged. Spent billions on acquisitions, but hasn't gained much. Not growing. Any boost to bottom line comes from cost cuts. Downhill since Covid, pipeline not strong. Better opportunities in the pharma space, such as MRK. 

BUY

Failure in a couple of drugs. Huge research program; they will find new drugs. Outstanding stock to accumulate because, at some point, they're going to announce a new drug and the stock will pop. Yield is close to 7-8%.

BUY

Hangover from its Covid highs. Working on an obesity pill, but pulled back on it. Opportunities in the pipeline. Owned in his income growth portfolio for the yield. Despite the chart, likes it here. Fairly cheap, hopefully hitting a bottom (knock wood).

BUY

It can bottom here. He believes in their Seagen acquisition.

WATCH

Once upon a time, he really liked it. Beaten up for inability to bring forward a weight-loss drug; that may or may not be a realistic critique of this stock long term. Analyst community is really...just...waiting. He sold last year, not ready to come back in. Solid company, an improved oncology pipeline might be a reason to get back in.

BUY

Pays a 7% dividend. Something good must be coming out of their Seagen acquisition. The pipeline looks promising.

DON'T BUY

He owned it but sold. Free cash flow is not abundant and it has a lot of debt. It will take time to turn around but pays a good dividend.

Unspecified

She likes the space but people are not investing in it. It has a low valuation and is tempting but she prefers elsewhere. It is a global leader in a crowded field. She sees 5% growth so there is some upside.