Pfizer (PFE) Stock Falling on Study Possibly Linking Viagra to Melanoma

NEW YORK (TheStreet) -- Shares of Pfizer (PFE) are falling 0.61% to $34.29 on Wednesday as a new study finds that taking several erectile dysfunction drugs may pose an increased risk of developing melanoma, The Wall Street Journal reports.

The study, published in the Journal of the American Medical Association (JAMA) involved men who filled one prescription for the drugs including Pfizer's 'Viagra,' Eli Lilly's (LLY) 'Cialis,' and GlaxoSmithKline (GSK) and Bayer's (BAYRY) 'Levitra.' The study found that men who took these drugs had a 21% higher chance of developing melanoma compared with men who did not take these drugs.

However, it's important to note that the total number of prescription filled did not translate into a higher risk, rather, the reason for an increased risk is the Viagra lifestyle, the Journal said.

"Men with higher socioeconomic status and income are at greater risk for developing melanoma, due to their lifestyle, which is also strongly associated with use of [erectile dysfunction] medicines," the study's lead author Stacy Loeb said.

While there is an association, a cause-and-effect relationship remains unclear, the Journal noted.

Additionally, Pfizer last year made $1.7 billion in 'Viagra' revenue, its sixth best selling drug.

Separately, 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 solid stock price performance, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • The current debt-to-equity ratio, 0.53, 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 1.81, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for PFIZER INC is currently very high, coming in at 86.14%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PFE's net profit margin of 21.87% significantly trails the industry average.
  • 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 ($2.03 versus $1.42).
  • You can view the full analysis from the report here: PFE Ratings Report

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