Steven Tighe
Merrill Lynch
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B.S., M.S., University of California, San Diego; M.B.A., Wharton School, University of Pennsylvania. Tighe has been covering pharmaceutical companies at Merrill Lynch since 1996. He heads the firm's global pharmaceuticals research. Tighe also spent 10 years at J.P. Morgan, first in research as a pharmaceuticals and biotechnology analyst and later in corporate finance engaged primarily in advisory and mergers and acquisitions work. He is vice chairman of the board of trustees, National Foundation for Infectious Diseases.

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The pluses in the pharmaceutical industry will outweigh the possible minuses over the next 12 months, predicts Tighe. He believes that the group will deliver faster earnings growth than the rest of the market in the second half of 2000 and into next year.

Tighe likes the earnings-growth prospects for two companies in particular -- Pfizer ( PFE) and Pharmacia ( PHA). Both completed major mergers earlier this year: Pfizer bought Warner Lambert (Merrill Lynch advised Pfizer on that hostile offer) and Pharmacia acquired Monsanto. According to Tighe, both have fabulous product portfolios with strong trends that will accelerate earnings by 25% or so. He believes that the group will deliver superior earnings acceleration relative to the broader market in the second half of 2000 and into next year.

"Just look at Pfizer's product line," Tighe says. With the Warner Lambert stable came Lipitor, which lowers cholesterol, and Neurontin for epilepsy and pain. Pfizer's product portfolio already consisted of Zithromax (an antibiotic), Zyrtec (for allergies), Norvasc (for hypertension or high blood pressure), Zoloft (for depression) and Viagra (for erectile dysfunction). Moreover, Pfizer is copromoting Pharmacia's Celebrex, a Cox-2 inhibitor for osteoarthritic and rheumatoid arthritis.

Tighe continues to do "original work when so many other sell-siders only parrot" management, says a client who voted in's Analyst Rankings -- Equity 2000. Indeed, before his shop was named adviser to Pfizer, Tighe published a comment explaining why a possible Pfizer-Warner Lambert merger would be "a great transaction."

Tighe considers Pharmacia his second-favorite name after Pfizer. He points out that the company continues to develop its prosperous Cox-2 inhibitor franchise, which includes Celebrex, launched in 1998. It is introducing a new class of drugs on the antibiotic front. And it remains a leader in oncology products.

Tighe's third pick among large-cap pharmas is Eli Lilly ( LLY), which "has a really interesting pipeline of products that holds the possibility of earnings-growth acceleration in coming years," he says.

The one big risk, says Tighe, is politics. Washington holds the cards on the Medicare prescription drug-benefit plan. If enacted, the plan could put pressure on drug pricing. While he believes that the November elections will stall movement on the Medicare front this year, Tighe frets about other possible legislation, such as an attempt to repeal importation bans on foreign-made drugs.

Tighe's recent newsmaking calls have focused on the smaller drug companies. He lowered his rating on Forest Labs ( FRX) from a buy to an intermediate-term accumulate, and raised his rating on Alza ( AZA) in anticipation of the summer launch of Johnson & Johnson's Concert, an attention-deficit hyperactivity disorder drug that Alza is copromoting. (Merrill Lynch has a longtime investment banking relationship with Alza.)

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With its second-quarter acquisition of Warner Lambert, Pfizer has further diversified and enhanced its product portfolio while reducing costs, Tighe says. The combined entity now has "multiple phenomenal franchises supported by a U.S. sales force 60% larger than that of its nearest competitor." Tighe expects Pfizer's earnings growth to surpass the industry and the market. The stock is now 45; Tighe's intermediate-term price target is 60.

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Which stock do you like best? Tighe and Scala: Pfizer Rubin: Schering-Plough

As originally published, this story contained an error. Please see Corrections and Clarifications.