Skip to main content

Dykstra: Pfizer Ready to Come Off the Bench

It's been in a rut, but these calls offer an opportunity.

In the past, impotence was rarely discussed. However, when it was presented as erectile dysfunction, an all-encompassing medical term, the treatment of this rather ubiquitous disorder was redefined. In particular, a little blue pill called Viagra addressed the situation effectively, and provided a big boost to


(PFE) - Get Pfizer Inc. Report


Recently some investors have been negative on the pharmaceutical industry, but Pfizer looks good here. With a market cap of $190 billion, Pfizer is the world's largest research pharmaceutical company, and the company is set to report its quarterly results this Friday. Analysts expect 57 cents in EPS on a 12.3% increase in sales and a 9.3% increase in profits.

Over the past year, shares have traded in a fairly narrow range, and the stock has been hemmed in by the loss of its patent-protected monopoly on several highly profitable drugs. In order to address the loss of revenue, management has cut costs by laying off 10,000 workers and closing or selling five plants. Although the word "layoffs" makes people cringe, they ultimately benefit a corporation's bottom line.

The loss of patents does hurt the company, but it is part of the normal cycle with pharmaceutical researchers and producers. With its huge free cash flow of nearly $20 billion and its investment into research and development, Pfizer has the capacity to replace lost patents. In its R&D role, Pfizer is engaging in an important role for society in seeking new solutions to medical ailments, while at the same time boosting its profits.

In the past couple of months, Pfizer's highly successful drug Lipitor, the first FDA-approved drug to lower cholesterol, was approved for five additional uses, and its new HIV treatment, Maraviroc, was granted accelerated review by regulators in the U.S. and Europe. Maraviroc could be a breakthrough with huge benefits for HIV patients. Accelerated review is granted to medicines that have the potential to greatly advance the treatment presently available for certain ailments. The drug's approval will be decided on within six months.

Further incentive for investors is the company's 4.4% dividend yield. This company is healthy, and provides a good opportunity to benefit using deep-in-the-money calls. I will place a limit order to buy 10 contracts of the September 22.50s (PFEIX) at $4.60, or better. The stock was recently trading at $26.94.

Game of Life

The recent nor'easter left many families frazzled. New Jersey declared a state of emergency. Flood warnings overflowed counties and many children awoke yesterday to the pleasant surprise of school closings. For parents who had to stay home from work with their children, the news was not as celebrated.

TheStreet Recommends

Traffic jams congested highways. Power outages hit many areas and floods swamped households. Whatever plans we had were postponed, unless of course one of us happens to own a Chitty Chitty Bang Bang vehicle to fly past life's barriers.

A different species of nature blocked traffic yesterday in Budapest, Hungary. Mother Nature was not the culprit, but rather, 5,000 rabbits. The rabbits escaped when a truck overturned on the M1 highway, which was heading to a slaughterhouse. The accident led authorities on a "bunny" hunt, just in case they had not enjoyed last week's Easter egg hunts enough!

The M1 highway, the main highway between Austria and Hungary was closed for several hours while they hopped after the fugitive rabbits. An estimated 500 rabbits were killed in the accident, while 100 of them emulated Harrison Ford's Dr. Kimble in escaping off the vehicle and maintained their "fugitive" identities.

For those of us who are not fortunate enough to have Dick Van Dyke's ride, rolling through life is not as much of a smooth journey. Life's traffic jams appear unexpectedly every day. Unfortunately, there's no escaping as they do in the movies. Sometimes, there are warnings which can help to prepare for a rainy day. Most of the time, however, the wind gusts without conveniently cautioning us of its imminent blow.

In times like these, we are forced to buckle up and endure the trip. We make adjustments to our routes even if we have to travel the windier and longer roads. Hopefully life's obstacles are not as impeding as an enormous storm. Nonetheless, we jump smaller hurdles every day without realizing it.

The Players' Club realizes that life often throws some barriers in our paths. Through our strategic partner, we are able to help athletes adapt to these setbacks more easily by guaranteeing recurring cash flow. It's inevitable that there will be many "delay of games", but in the game of life, the Players' Club promises to do all it can to prevent a "rainout."

Always Remember: Life is a journey, enjoy the ride!

At the time of publication, Dykstra was long PFE.

Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.

Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.