On Monday, CFRA, a financial research firm, upgraded the price target for Pfizer Inc. (NYSE:) shares to $31.00, moving up from the previous target of $30.00. The firm has maintained a “Hold” rating on the stock. The adjustment reflects a valuation set at 10.9 times the projected 2025 earnings per share (EPS), which is still below Pfizer’s historical average price-to-earnings (P/E) ratio.
The analyst at CFRA has revised upwards the earnings forecasts for Pfizer, with the 2024 EPS estimate increasing to $2.62 from $2.57 and the 2025 estimate to $2.84 from $2.82. These changes come amidst reports that activist investor Starboard Value may have acquired a $1 billion stake in Pfizer. The presence of an activist investor can potentially lead to significant changes within a company, depending on their agenda and the company’s receptiveness to collaboration.
Although specific intentions of Starboard Value regarding its investment in Pfizer have not been disclosed, Pfizer’s post-Covid performance compared to its peers and scrutiny of its recent research and development (R&D) activities might be areas of interest for the activist investor. Pfizer’s recent financial moves include the sale of a portion of its stake in consumer healthcare company Haleon last week. This sale reduced Pfizer’s ownership in Haleon to 15% from 22.6%, aligning with its strategic plans. The use of the $3.3 billion proceeds from this transaction is considered a key point to watch in the near future.
In other recent news, Pfizer Inc. has been the subject of several notable developments. Pfizer’s earnings and revenue have been influenced by new cost initiatives, as recognized by TD Cowen, which maintained its Hold rating on the company. The firm’s strategic efforts have been weighed against challenges such as competitive pressures on core products and a pipeline of new drugs showing unimpressive performance.
Investment firm Starboard Value has acquired a stake in Pfizer, valued at approximately $1 billion, potentially signaling internal changes within the company. BMO Capital Markets, despite acknowledging the slow nature of pharmaceutical turnarounds, reaffirmed its Outperform rating on Pfizer following this development.
In the face of potential revenue growth constraints and current debt levels, Leerink Partners maintained its Market Perform rating on Pfizer. The company has also adjusted its investments, reducing its stake in Haleon, a leading consumer healthcare company, to 15% through a share sale worth approximately $3.3 billion.
Pfizer made the decision to withdraw its sickle cell disease treatment, Oxbryta, from global markets due to concerns about the drug’s risk-benefit balance. Notwithstanding this, BMO Capital has maintained its Outperform rating on Pfizer, expressing confidence in the company’s overall business outlook.
InvestingPro Insights
To complement CFRA’s analysis, InvestingPro data offers additional insights into Pfizer’s financial position. Despite recent challenges, Pfizer maintains a significant market presence with a market capitalization of $165.47 billion. The company’s commitment to shareholder returns is evident through its impressive 5.88% dividend yield and a 2.44% dividend growth over the last twelve months.
InvestingPro Tips highlight Pfizer’s strength as a dividend payer, noting that the company has raised its dividend for 13 consecutive years and has maintained dividend payments for an impressive 54 consecutive years. This consistent dividend policy aligns with CFRA’s “Hold” rating, suggesting stability despite current headwinds.
While CFRA’s upgraded price target reflects some optimism, it’s worth noting that Pfizer’s revenue growth has been negative (-29.65%) over the last twelve months. However, the quarterly revenue growth of 2.12% in Q2 2024 may indicate a potential turnaround, supporting CFRA’s improved earnings forecasts.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Pfizer, providing a deeper understanding of the company’s financial health and market position.
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