A number of big pharmas such as Roche, BMY, and Merck are hard at work trying to develop a new type of cancer drug that disables certain proteins in the body such as PD-1 that prevent the immune system from recognizing and destroying cancer cells. There was a big medical conference that was held this past week -end that was specifically dedicated to this exciting new area of cancer research. Quess what? PFE wasn't represented in the conference because it isn't even involved yet in this arena which it cetainly needs to do before it is too late.
There is absolutely NO area of medical research where Pfizer HAS to be involved in. Pfizer is heavily involved in many areas that the likes of MRK and Roche are NOT involved in. For its part, Pfizer is heavily involved in many areas of oncology and if they are not yet involved in this one area, so what? One or two drugs isn't going to make or break a company Pfizer's size.
Pfizer's main problem these days is that they have little pricing power given European austerity measures and mid single-digit earnings growth and that due just to stock buybacks simply doesn't warrant earnings multiples in the teens.
When a stock or sector seems to be fairly priced if not overpriced, I see no need to continue being involved just for diversification's sake. Two months ago, I got out of my entire position in Pfizer after a 100-month involvement. The 300K that I put into grossly-undervalued BIDU is already up by 32% while Pfizer is actually down a little from my get-out point and going nowhere fast.
As Kenny Rogers once crooned, "you've got to know when to hold 'em and know when to fold 'em" and as far as Pfizer is concerned, I have folded them with the possible exception of selling deep out-of-the-money naked puts on dips,.
Why do you still seem to be so heavily involved with Prfizer? Do you really think that the stock should be much above $30 where it would be sporting a multiple in the 13 to 14 area? WHY should a 5% earnings grower with a rather-pedestrian 3.5% dividend sell for much more than that?
As you know, I was a big bull on this stock for many years when it was selling for 8, 9 or 10 times earnings. But not at 12, 13 or 14 times. Valuation matters to me, a value investor. It should matter to you as well.
I am certainly a novice in the oncology area but what I have read so far, the early stage results wiith the immune system cancer drugs have been exciting. Merck 's immune system drug to treat advanced melanoma has shown very good results in early trials as has a combo set of drugs from BMY based on the same principle. The analysts that attended last week-end's cancer conference where the latest immune system results were reported were certainly impressed. We are all skeptical of 'Holy Grail' miraclle drugs for serious diseases which certainly includes me but this particular approach may have profound consequences. If the blocks that normally prevent the body's immune system to recognize and selectively kill cancer cells can be removed then theoretically it should be possible to cure at least certain types of deadly cancers without having to resort to using archaic, non-specific, chemotheorapy and radiation treatments which have horrible side effects. In my opinion, Pfizer indeed needs to seriously investigate thie immune sytem approach for treating cancer, regardless of how involved it is in other cancer treatments because there is the possiblity that this approach may turn out to be head and shoulders better than all of the others.