The stock is up quite a bit. The desperate dividend players pushed this up to an unsustainable $31 or so. Right now, the $27-$28 level is about right given the earnings profile and recent P3 news on ozogamicin.
I'm adding if we break $27 though.
Pfizwer broke trend and fell out of its prior trading range on April 30 when the stock tanked from $30.43 to $29.07 in the wake of its earnings miss and disappointing outlook. Since then, however, it has N OT gone down every day at all; it has been locked in a new narrow closing trading range between $28.60 and $29.56.
The main problem is that there is virtually no internal growth; the small gains in earnings per share are entirely due to stock buybacks. Pfizer does 5/8 of its business overseas where it has almost no piricing discretion at all. Foreign governments largely dictate to Pfizer what they will reimburse for the drugs. And for the most part, especially with European austerity, the trend is towares slightly LOWER prices each year.
Analyst consensus calls for only 2% earnings gains in 2013 followed by 5% type gains in 2014 and 2015. The stock currently sells for a rather rich 13 times earnings and its dividend yield is a rather pedestrian 3.4%.
With such fundamentals, do you really think that the stock is undervalued? I think it's at least fully valued and quite likely overvalued at this point. That's the reason why I completely exited the stock on April 2 as Pfizer was approaching $30. I just couldn't imagine why many investors would be willing to pay much beyond $30 a share with such a tepid outlook for the foreseeable future.
Thanks for your reply. What you said made sense to me and your comments also support a new PFE news article that just came out this morning:
5:23 PM Pfizer (PFE) says it's discontinuing Phase 3 studies on its investigational compound inotuzumab ozogamicin in combination with rituximab, a treatment for patients with non-Hodgkin lymphoma who are not candidates for intensive high-dose chemotherapy, after the study failed to meet its primary objective of improving overall survival. No new or unexpected safety issues were identified, and PFE says it's continuing to review the the drug for potential subset applications. Shares -0.3% AH. Read comments