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Pfizer Inc. Message Board

  • galantfoxjr galantfoxjr Dec 13, 2007 5:37 PM Flag

    Comments by 1Nf1DeL

    Comments in a Motley Fool article where 1Nf1DeL was a link. The following is the message from that link. Don't ask me what 1Nf1DeL is because I don't know.

    "Pfizer faces the problem of patent expiration on 2 of it's blockbuster drugs, especially Lipitor. This negativity is compounded by the fact that the drug meant to replace the revenue stream of Lipitor failed to make it through the Phase II trials. Indeed a blow for Pfizer. Considering this backdrop I am not surprised to see a shakeup in senior management.

    Nevertheless, Pfizer is a top dog. It is a great company by all means and does not deserve such a pessimistic valuation. It has a fantastic history of paying dividents as well as a rock solid balance sheet. It also is far more efficient moving drugs from Phase II testing to clinical acceptance (increase of 70%)---ironically the most promising block buster replacement did not make it though---and the pipeline is as good as ever.

    From a valuation standpoint the company now trades at 12 times free cash flow---which is too low for a company of such calibre. 20 times cash flow would be a much fairer figure. Some models suggest that even without any sales of Lipitor at all a fair value of Pfizer would be pegged around 20$ - 22$. At 25$ a pop I would be a buyer here. Lipitor sales are not going to stop just because it is going generic in 2012. At current price levels combined with negative sentiment Pfizer can be an extraordinary opportunity. A 4.8% annual dividend yield sweetens the wait.

    Pfizer currently trades at almost 50% off it's all time high. However, it's earnings have doubled since. The price of this security did hardly make any move over a substantial number of years which creates additional negativity (disgust). Looking at the lofty valuations of small cap companies (who may have benefited immensely from leveraged buyouts and the private equity boom), it is quite conceivable that money may move into the more conservative havens of large cap companies who at large look rather undervalued at present".

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