How Will Pfizer (PFE) Stock React As Lawsuits Over Lipitor Grow?

NEW YORK (TheStreet) -- Shares of Pfizer Inc.  (PFE) are slightly lower in pre-market trade as the pharmaceutical company faces a growing number of lawsuits by women who allege that the company knew about possible serious side effects of its blockbuster anti-cholesterol drug Lipitor but never properly warned the public, Reuters reports.

In the past five months, a Reuters review of federal court filings shows, lawsuits by U.S. women who say that taking Lipitor gave them type-2 diabetes have jumped to about 1,000 from 56.

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Lawsuits began to be filed not long after the FDA in 2012 warned that Lipitor and other statins had been linked to incidents of memory loss and a "small increased risk" of diabetes, Reuters said.

According to plaintiffs' lawyers, women face a higher risk than men of developing diabetes from using Lipitor, and gain fewer benefits.

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

"We rate PFIZER INC (PFE) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its expanding profit margins over time. 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's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. 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 ($2.24 versus $1.65).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for PFIZER INC is currently very high, coming in at 73.96%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, PFE's net profit margin of 22.92% compares favorably to the industry average.
  • In its most recent trading session, PFE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 79.3% when compared to the same quarter one year ago, falling from $14,099.00 million to $2,912.00 million.
  • You can view the full analysis from the report here: PFE Ratings Report

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