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Pfizer Needs to Think About Splitting: Goldman

On Rubin's report, Pfizer shares closed up over 1.5% to $22.50 in Tuesday trading. The company's shares are up nearly 10% since announcing a strategic review in July.

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The final step, a full split of Pfizer's drugs businesses could come in two to three years' time, with the possibility that the moves drive $5.7 billion in additional sales, adding 93 cents to earnings per share, according to Rubin.

In December 2010, Ian Read took over as CEO of Pfizer after the retirement of Jeffrey Kindler, and has led sweeping change. The company has revamped its drug R&D processes, launched dividend and share buyback increases and announced multi-billion dollar sale and spinoff efforts.

"In our view, [Pfizer] has emerged a new company, with significant execution still ahead but the important groundwork laid down. While 2011 was clearly a transformative year for [Pfizer] with sweeping catalysts that unlocked shareholder value, we continue to see significant and stock-moving catalysts ahead," wrote Rubin.

Previously, the company had been one of the most aggressive post-crisis M&A players, buying Wyeth in 2009 for over $60 billion and King Pharmaceuticals for $3.3 billion a year later. Overall, Pfizer has cut $230 billion worth of deals since 1987, according to Bloomberg data, which shows that its average acquisition is nearly $4 billion.

In 2011, Pfizer saw its profitability rise to a post-recession high of $12.8 billion on sales of nearly $67.5 billion; The animal health and baby nutrition units that Pfizer is looking to divest reported $6.3 billion in 2011 sales.

Analysts give Pfizer shares a $24.92 price target, according to estimates compiled by Bloomberg on expectations that the company will see its profits increase to $16 billion, even as sales fall to $62.3 billion.

For more on healthcare sector spinoffs see how a Covidien split continues the breakup of the Tyco empire. See 5 short sighted stock spinoffs for more on corporate breakups.

-- Written by Antoine Gara in New York.
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