Will a Possible Sobi Acquisition Affect Pfizer (PFE) Stock?

NEW YORK (TheStreet) -- Shares of Pfizer (PFE) were gaining 0.4% to $34.06 in morning trading Friday following a report that the drug manufacturer is bidding for Swedish Orphan Biovitrum, better known as Sobi.

Pfizer is the company that Sobi didn't name when it recently disclosed that a potential buyer made a preliminary offer, according to Reuters. The negotiations are confidential and there is no word what price Pfizer would offer for the Swedish company.

Sobi creates medicines for rare or "orphan" diseases, and has a market value of 35.8 Swedish crowns (about $4.3 billion). Pfizer currently sells a hemophilia treatment called ReFactor AF that 's manufactured by Sobi.

During Pfizer's earnings call on Tuesday, CEO Ian Read said he was open to possible deals and was "agnostic" regarding the size of acquisitions, according to Reuters.

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 increase in stock price during the past year, growth in earnings per share, expanding profit margins and increase in net income. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

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

  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PFIZER INC has improved earnings per share by 8.6% 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 reported lower earnings of $1.42 versus $1.65 in the prior year. This year, the market expects an improvement in earnings ($2.08 versus $1.42).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.4%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for PFIZER INC is currently very high, coming in at 74.70%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 21.87% trails the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Pharmaceuticals industry average, but is greater than that of the S&P 500. The net income increased by 2.0% when compared to the same quarter one year prior, going from $2,329.00 million to $2,376.00 million.
  • You can view the full analysis from the report here: PFE Ratings Report
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