Lack of Catalysts Keeps Analysts Away From Pfizer

Pfizer (PFE) may not be the best investment in coming months, as analysts say the company's near-term prospects are uninspiring. Despite leading drug brands, including a treatment for metastatic breast cancer called Ibrance and a pneumonia vaccine known as Prevnar-13, these analysts say the company needs to do more to jump-start growth.

"We see few major catalysts that can drive outperformance for the shares as well as slowing momentum for Ibrance and potentially a slow decline going forwards for Prevnar-13," analyst Jeffrey Holford of Jefferies LLC wrote in a note.

Holford dropped his rating on the stock from outperform to hold, and his price target to $36 per share. Pfizer was trading at $32.08 per share Thursday, down 0.8% from market's open.

Not all is gloom and doom for Pfizer. Analyst Alex Arfaei of BMO Capital Markets wrote that he sees Ibrance's market position as a positive for the company. He noted that Ibrance will likely remain a leader in the space, despite competition from Eli Lilly's  (LLY) Abemaciclib, thanks to its entrenchment in the market. Arfaei has an outperform rating on the stock, with a price target of $33.56 per share. But that's lower than Holford's target. 

Much of Holford's hesitance on the stock surrounds the company's M&A strategy, which, at present, is unclear in the wake of its unsuccessful effort to merge with Allergan (AGN) and shift its tax domicile from the U.S. to Ireland in the process, a tactic known as an inversion.

"We remain positive on management, but their efforts around inversion and separation of the business have not been fruitful," Holford wrote. "We expect major M&A from Pfizer in the next 12-18 months and would remain on the sidelines until this plays out."

To be sure, Pfizer has recently shown signs of M&A life, announcing the sale of its Hospira Infusion Systems business to privately held ICU Medical Inc. earlier this month. At the time, analysts said the deal likely wouldn't add much to Pfizer's sales and earnings.

This announcement came after in September Pfizer said it no longer plans to break up its older drug product portfolio, Essential Health and its newer, patent protected portfolio, Innovative Health.

Meanwhile, according to TheStreet's sister publication, The Deal, Pfizer has been rumored to be a potential buyer for targets like Biogen Inc. (BIIB) , Sorrento Therapeutics Inc. (SRNE) , Synergy Pharmaceuticals Inc. (SGYP) and Anacor Pharmaceuticals Inc.  (ANAC) .

But the failure to pull the trigger on any of these candidates, coupled with Pfizer's failed $150 billion deal with Allergan have resulted in a fair amount of doubt about the company's growth prospects. 

"With both the termination of the proposed merger with Allergan earlier in the year as well as confirmation that the Essential Health business (formerly GEP) will not be separated in the near term, we see few drivers for the shares," Holford wrote.

And Pfizer is now coming under fire from Doctors Without Borders, which pushed Pfizer in April to lower the price of its pneumonia vaccine to $5 for the three doses necessary. Pfizer offered to provide 100,000 vaccines to the organization, which it rebuffed on Monday.

"By giving the pneumonia vaccine away for free, pharmaceutical corporations can use this as justification for why prices remain high for others, including other humanitarian organizations and developing countries that also can't afford the vaccine," Doctors with Borders executive director Jason Cone wrote in a Medium post.

Pfizer has yet to respond. The company has a market cap of $198.77 billion. 

Allergan is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AGN? Learn more now.

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