Pfizer Hits Lowest Level Since 1997

Pfizer Inc. (PFE) hit its lowest level since 1997, and has fallen eight out of the past nine trading sessions since May 19 to almost crack $19 intra-day. It’s the longest stretch of time that the stock has remained in teenager land this decade.

If it wasn’t for the attractive 6.5% dividend yield, it probably would be prudent to cut ties at these levels because of a not so great pipeline, to put it gently, and the growing threats from generic competition. However, with the dividend in-check thanks to aggressive cost cutting that should also make full year earnings estimates attainable, combined with the fact that the stock trades at an ultra-low valuation at a mid-single digit P/E, there really can’t be much more significant downside.

In fact, given the negative press surrounding the drug maker lately, i.e. Chantix, the recent drop has been rather muted and only accelerated yesterday because of a broad market sell-off. There might not be many upside catalysts but this is not a case of Citigroup (C), the previously under-capitalized bank that had to write down assets and cut its dividend, that earlier this year ended up becoming the ultimate value trap.

Related Articles:

• April 24, 2008: Pfizer: The Ever-Devaluing Big Pharma Value Stock

Comments

[BioInvestor]

The drop begs the question is there anything unique to Pfizer. The company stands to lose a major product when Lipitor goes off patent in a few years, but that event appears to be priced into the company. Other than Lipitor--and some unlucky recent clinical results--there's nothing else to talk about that doesn't also impact the entire industry.

Who can tell what the future holds. Some of Pfizer's drugs came out of the blue. Even in late Phase III, the full potential impact of Viagra and Lipitor (in the days of WL) wasn't realized.

Pharm goes through phases; we're in a buying phase now!