Seeking Alpha
Profile| ()  
When Merck (MRK) was the most hated stock on Wall Street post-Vioxx, one analyst taking the other side of the trade was Mike Krensavage of Raymond James. At the time his point was simple: Merck's cash flow yield relative to its enterprise value of 11%, its highest since 1994, was the highest in an industry where the typical yield was 4.4%. "If you have good enough cash flow, even with declining sales, you can make money on your investment," he said at the time.

Enter Pfizer (PFE), which he has ranked as "market perform": It currently has an 8% cash flow yield, but Krensavage told his sales force: "We continue to liken Pfizer to a convertible bond." Even if sales grow sluggish, which he believes is likely, it can continue to cut costs to generate enough free-cash flow to produce a healthy yield. He goes so far as to say he would reconsider his rating if the cash flow yield hits 10%.

Meanwhile, the sleeper in this whole Torcetrapib fiasco might be Abbott (ABT), which is buying Kos Pharmaceuticals (KOSP). Kos makes Niaspan, a slow-release form of the vitiamin Niacin, which has long been used to raise good cholesterol.

Source: Pfizer Post-Torcetrapib: Follow The Cash -- And Abbott