It has been a rocky start to the trading week as news out of Europe has been pummeling U.S. markets. It is in times like these, especially after a huge rally in October, that it pays to be cautious.
Key data points from the just released earnings report:
- Management upped its financial targets for 2011 to the top end of the consensus range.
- Pfizer easily beat expectations on both revenue and EPS where it beat by 7 cents a share after non-recurring items.
- Pfizer also widened its planned share repurchased program by $2B.
- It is launching a generic version of Lipitor, it largest selling drug whose patent expires by the end of the quarter.
- Sales of pneumococcal vaccine Prevnar 13 rose 37% to $1 billion, while sales of anti-inflammatory drug Enbrel were up 20% at $957 million.
5 reasons Pfizer is a solid value at $19 a share:
- PFE has an AA rated balance sheet, a low beta (.70) and yields 4%.
- Pfizer is selling near the bottom of its five year valuation range based on P/B, P/E, P/S and P/CF.
- Analysts have consistently been low in their earnings estimates on PFE. The company has beat EPS estimates 11 of the last 12 quarters.
- Pfizer is selling at less than 8.5 times its forward PE and less than 7 times operating cash flow.
- The stock is selling under analysts’ price targets. S&P has a price target of $24 on PFE and the median analysts’ price target on Pfizer is $23.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PFE over the next 72 hours.