How Will Pfizer's (PFE) Stock Be Affected By Its Ongoing Battle for AstraZeneca (AZN)?

NEW YORK (TheStreet) -- Shares of Pfizer Inc. (PFE) are currently down -0.87% to $28,92 as it finds itself enmeshed in a political firestorm in the U.S. and Europe as it continues its attempt to buy AstraZeneca (AZN).

A new offer is expected next week. AstraZeneca's shares are down -1.32% to $77.70.

A strategic question for Pfizer and its advisers is whether to come back with a new bid before bosses from both companies are grilled by U.K. lawmakers on May 13-14, or wait until the end of the week, Reuters reports.

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Pfizer's record of slashing jobs after a string of earlier mergers has provoked a political backlash against the proposed $106 billion takeover at home and in Britain, with two U.S. state governors --Maryland and Delaware--joining the fray yesterday, according to Reuters.

Many in the U.S. are concerned that Pfizer's promise to Britain that the combined company would keep 20% of its R&D workforce in the country will inevitably jeopardize American jobs.

TheStreet Ratings team rates PFIZER INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate PFIZER INC (PFE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PFIZER INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PFIZER INC increased its bottom line by earning $1.65 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($2.23 versus $1.65).
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, PFE has a quick ratio of 1.79, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has increased to $5,786.00 million or 10.08% when compared to the same quarter last year. In addition, PFIZER INC has also vastly surpassed the industry average cash flow growth rate of -40.05%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Pharmaceuticals industry and the overall market on the basis of return on equity, PFIZER INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • You can view the full analysis from the report here: PFE Ratings Report

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