Pfizer Inc (PFE)

Pfizer (PFE-N) or Merck (MRK-N)? Neither. These companies did very, very well back in the last part of the last century. Patent protection laws really haven’t given them enough of a boost to be able to cover the enormous costs of developing and testing the drugs, and there is a high failure rate. The companies have made massive consolidations. They’ve tried to grow by spending less. He would look at the Bio-Pharma area instead, such as Biogen (BIIB-Q) or Celgene (CELG-Q). Financially, these companies are in good shape and are growing.

Pharmaceutical stocks in general have not being great performers because of worries about drug pricing and patent cliffs. This is a company that has faced patent cliffs in the past and currently. The way the industry normally responds to this is by developing new drugs themselves to replace what they are losing, or making acquisitions of companies that have promising drugs. Dividend yield of 3.9%. (Analysts’ price target is $37.)

They have global heft and a number of different proprietary drugs, the size of their R&D program. Has the largest sales force in the world. They have the foreign exposure in emerging markets. PE is very attractive. Dividend yield of 4%. (Analysts’ price target is $37.50.)

Pharma is out of favour. This trades at about 12X earnings with a 4% dividend yield. There could be a catalyst if the company sells its consumer division. (Analysts’ price target is $37.00.)

This is inexpensive trading around 12.5X forward earnings. There are some patents coming off including Viagra and some pain medication. Made a couple of acquisitions. Expect it will be a flat environment for the next year. Decent dividend yield.

It is trading in a fairly well defined trading range. It could go up or down, equally as likely. He would not touch it right now.

She is buying it because you have a high quality company that has done nothing for some time. Development going on is interesting even if not the block buster drugs of the past. It is a nice entry point and there will be attractive upside. You get a nice dividend to wait. 3.8% dividend.

Yield is about 4% and the stock is selling at about $33, so he sees a skinny into the low $40’s. They’ve struggled for the last 2 years because blockbuster drugs have come off patent, but they are using financial engineering to continue to push the company forward. Have made several acquisitions of new and upcoming companies with some very interesting drugs. A very low risk way of playing the healthcare industry. There is more upside than downside.

Likes the valuation. Trading at around 13X next year’s earnings. This has a history from 2010 to 2015, subject to a big patent cliff, where they had significant declines in revenues. They’ve filled out their pipeline. Has 140 drugs that are over $100 million in revenues. 8 are blockbusters with over $1 billion in revenues. Likes the valuation and the yield.

They’ve been focused in the last 12 months on cutting costs. Have massive amounts of consumer products and health care products and they are divesting brands. Pays a pretty good dividend. You should be able to get 10%-12% total returns on a stock like this. (See Top Picks.)

The problem is that it has a fairly thin pipeline of new drugs coming out, which is the reason they have gone out to try and make acquisitions. This now leaves them wondering where the next leg of growth is going to come from. 4%+ yield.

The US administration are hitting drug pricing. It has hurt valuations. PFE-N has been relatively passed up. It has a 50% upside potential. It has technical support at $31. If this does not hold then get the heck out. GILD-Q is more beat up and looks very cheap.

He is bullish on this. It is all about risk/reward. The company has an infrastructure, in terms of its sales force, that is unmatched. They have a very pristine balance sheet. Wonderful research and development operations. Very attractive dividend at close to 4%. It will likely outperform the Dow over the next 12-18 months.

You have to be careful of healthcare names. It looks like Trump has a bit of a target on these. Even without Trump, this company has an underwhelming pipeline of drugs that are coming through, and that is the issue that is hitting them. Trading at about 13X earnings, but its growth rate has come down to very, very low single digits. An unexciting drug pipeline is probably going to hold it back.

This had a patent cliff with Wyatt a couple of years ago, which had a lot of promising new drugs. They have a huge amount of assets overseas in cash, which they would love to bring back, but taxation rates to bring that back are very, very high. Under the Trump administration, it is expected that that is going to change and the tax rate is going to plummet, making a lot of sense for US drug companies to bring money back in, which they can use for share buybacks, acquisitions or pumping up R&D. Dividend yield of 3.96%. (Analysts’ price target is $37.42.)