Pfizer Seems To Have Received The Message That Less Is More

Nov. 9.12 | About: Pfizer Inc. (PFE)

By Barry S. Cohen, Stock Traders Daily

Pfizer (NYSE:PFE) appears to have gotten the message that a dormant stock is unacceptable, that a nice dividend isn't enough. It may have taken some time, but the New York City-based pharma giant has evidently concluded that its acquisition spree of earlier years has done nothing to increase shareholder value. Better yet, it's doing something about it. Our real time trading report for PFE can help investors figure out exactly how to make heads or tails of the recent and potential future moves in the stock's price.

One move that undoubtedly cheered investors occurred earlier this year, when Pfizer agreed to sell its infant nutrition group for nearly $12 billion to Nestle SA, which beat out rivals including Danone SA. The deal is expected to close during the first half of 2013.

More recently Pfizer said it plans to spin off its animal health unit into a separate company called Zoetis. Pfizer is selling a 20 percent stake in Zoetis through an IPO and appears open to peddling the remainder of the new company sometime later.

Investors are optimistic that shedding the infant nutrition and animal health units will enable the New York City-based giant to focus its energies on the pharmaceutical business and start churning out the blockbuster drugs that once made the company a darling of Wall Street.

Both Pfizer and investors would love to see its pipeline produce another Lipitor, which was acquired in the 2000 merger with Warner-Lambert. The cholesterol medication, which clocked in approximately $13 billion in sales at its peak, lost patent protection in the United States late last year. Pfizer knew it would lose a substantial amount of Lipitor sales to copycat drugs but, as the company acknowledged in reporting its third-quarter results last week, generic erosion of Lipitor was a bit faster than expected.

The company pointed to this as one of the reasons that third-quarter profit fell 14 percent. Pfizer's adjusted earnings, excluding one-time items, met analysts' expectations, but revenue fell short. The company tightened its forecast range for full-year 2012 sales and adjusted earnings.

One drug that Pfizer has high hopes for is ELIQUIS, the approved trade name for apixaban in Europe and the proposed trade name in the U.S. In 2007, Pfizer and Bristol-Myers Squibb (NYSE:BMY) entered into a worldwide collaboration to develop and commercialize ELIQUIS, an investigational oral anticoagulant discovered by Bristol. Our real time trading report for BMY might shed some light on the opportunities associated with this deal.

The companies are working to get the drug approved to prevent stroke or systemic embolism in patients with atrial fibrillation. Atrial fibrillation is the most common cardiac arrhythmia (irregular heart beat). One of the most serious medical concerns for individuals with atrial fibrillation is the increased risk of stroke, which is five times higher in people with atrial fibrillation than those without atrial fibrillation. In fact, 15 percent of all strokes are attributable to atrial fibrillation in the U.S.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Barry Cohen is a healthcare writer for Stock Traders Daily. Stock Traders Daily receives no compensation from the companies mentioned in this article.