> For 2012, I'm looking for $24 to $25... Chartness
================================================== Re: It's in management's interest to keep PFE under $25 26-Sep-07 04:17 am
The difference between a stock like PFE paying a 5.1% yield at current prices instead of 4.8% is the difference between a COMPELLING buy and just a very good buy in the eyes of many investors.
5% for a rock-solid blue-chip secular growth stock is the holy grail - because it means that just a 5% gain from stock price appreciation would get the overall return to the magic double-digit level that most retirees want.
With a full 5% dividend yield, a $24 stock just has to go up by a little over a point in a year's time and the 10% return is obtained.
For this reason, you rarely see a stock like Pfizer on the list of full 5% dividend payers among S & P 500 stocks. The ONLY current 5% dividend payer among S & P stocks that isn't a financial, energy or telecom is Reynolds Tobacco, a very slow grower laden with debt, paying out 75% of its profits in dividends and having many years of legal settlements ahead of it. That isn't exactly a Pfizer, is it?
Regarding the likelihood of Pfizer declining, time is very much on the company's side. The more time that goes by, the closer it gets to when it is absolutely in the clear at the end of 2011 - with the Lipitor expiration behind it, expected to earn $2.60 or so in 2012 and then five years of expected double-digit earnings growth given the unbelievably-low patent expiration schedule.
Certainly a company in such a situation would at least warrant the same kind of 16 or 17 multiple that the likes of LLY, BMY and MRK have NOW - with those companies soon to suffer the loss of major drugs.
So the closer it gets to the end of 2011, the closer Pfizer should be to having its stock in the low 40's. The stock doesn't figure to go from $25 at the end of 2010 to $42 or some such a year later - as time draws nearer, the stock should certainly advance from current levels. This is what you are missing. How can you have so little imagination as to not see this?