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Pfizer Inc. Message Board

  • galantfoxjr galantfoxjr Feb 15, 2013 2:25 PM Flag

    Looking Back

    Remember the spirited discussions we had on the message board regarding the purchase of Wyeth for a whopping $63B? In retrospect, it turned out to be a very astute decision. PFE is already reaping the benefit of some Wyeth drugs and there are others in various development stages that have significantly strengthened PFE's
    pipeline. Furthermore the scientists that we acquired from Wyeth have and will continue to improve the efficiency of PFE's R&D efforts which was certainly greatly needed before they came on board. The biggest concern now is PFE's rather anemic growth potential according to the recent analyst concensus which puts PFE below its peers such as MRK, BMY, and LLY. PFE currently has a lot of cash on hand resulting in part from its various cost-cutting programs and also from the IPO of Zoetis. Might this be a good time to make another astute drug company acquisition? How about a good bitech company such as Celgene? What do you think?

    Sentiment: Buy

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    • Wyeth was a good acquisition because PFE bought the company near the very bottom of a once-in-a-lifetime crash. If Pfizer wanted to buy out CELG, they would have to shell out at least $100 a share for the 440 million shares. In other words, CELG would cost them 2/3 of what they paid for WYE. But whereas WYE contributed about $4.5B in after-tax earnings, the much-smaller CELG would only be contributing $1.8B.

      Such an acquisition, with PFE having to pay something like 23 times earnings would be highly DILUTIVE to current earnings. It's the last thing that I would want to see. Much better that PFE use their cash to reduce the share count which of course increases the all-important earnings per share. An acquisition where PFE has to pay about DOUBLE the Pfizer PE just isn't a wise move.

      Pfizer currently has a market cap of about $200B and its non-GAAP earnings are expected to be about $17B this year. How can it be a good move to shell out $100B for a company expected to garner only $1.8B net in 2013? Yes, there would be cost efficiencies on such a merger but nowhere near enough to prevent substantial dilution.

      Sentiment: Buy

      • 2 Replies to fizrwinnr11
      • ===================================================== ========
        Re: Appears Pretty Advanced With WYE 23-Jan-09 03:43 am

        Just plain horse sense should tell you that it isn't very intelligent to be issuing beaucoup shares of stock that is selling near the lowest PE in history to acquire another pharma that has almost as serious "patent cliff" problems as Pfizer.

        As for economies of scale and cost-cutting, the combined company would have almost NINE billion shares outstanding and even cutting as much as $1.35B pre-tax and $1.0B after tax would only increase EPS by 11 cents from my figure. It would STILL be only about $2.45 as compared with the $2.65 that would be seen if Pfizer acquired decent smaller pharmas strictly for cash. And the $2.65 would also be a little higher after the cost-cutting and economies of scale.

        No - this deal makes little sense to me. Hopefully it will never happen.

        chrt13sezzh...
        ===================================================== =======
        =============================================================
        Re: lly ceo says pFE/WYE deal.. 5-May-09 06:14 pm

        WYE makes a LOT of sense for Pfizer. LLY never could have afforded it.

        chrt13sezzh...
        =============================================================

        Chrt13 said on Jan 23, "this deal makes little sense to me."

        Chrt13 said on May 5, "WYE makes a LOT of sense for Pfizer."

        'nuff said!

        ROFLMAO!

      • Do you have a stock price in mind when you will completely get out of all of your PFE holdings?

    • MRK and BMY growth estimates are in line with PFE while LLY is lagging.

 
PFE
31.97+0.85(+2.73%)Dec 18 4:03 PMEST

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