Pfizer offers an attractive mix of inexpensive valuation, with forward P/E of just 9x; multiple catalysts in the form of Phase III data or FDA approval for many late-stage drugs; high FCF and dividend yield; and limited earnings risk.
Although the company's 2012 guidance disappointed some analysts, I believe it was lower mainly due to the FX headwinds, which are already baked into the stock price now. Further, management hinted that it was looking to manage its pharma business as two distinct entities, an innovative core pharma segment and value products division. As dynamics of these two groups will be made known, valuation could go up.
Cost synergies from the Wyeth (WYE) acquisition is another positive as the company works through its Lipitor expiration. The drug pipeline for 2012 seems solid with four new $1 billion plus products-- Eliquis, Xalkori, Prevnar and tofacitinib. Management is also committed to return cash to its shareholders, with $5 billion expected share buybacks and a dividend yield of 4%. Clearly, it is a quality company trading at an attractive 9x forward PE multiple and I will recommend buying the stock.