Is Pfizer a Buy?

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With shares of Pfizer (NYSE:PFE) trading around $31, is PFE an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Pfizer is a biopharmaceutical company that discovers, develops, manufactures, and sells medicines for people and animals worldwide. The company manages its operations through five segments: Primary Care, Specialty Care and Oncology, Established Products and Emerging Markets, Animal Health and Consumer Healthcare, and Nutrition. Pfizer’s main products are human and animal biologic and small molecule medicines, as well as vaccines, nutritional products, consumer healthcare products, and products for the prevention and treatment of diseases in livestock and companion animals.

Patent expirations continue to be a problem for the United States’ largest pharmaceutical manufacturers. Since Pfizer’s patent for its blockbuster cholesterol medicine Lipitor — which for nearly a decade was the world’s top selling drug — expired in 2011, earnings and revenue have struggled to grow. Like many large drug manufacturers, cheaper generic versions of its once top selling pharmaceuticals are eroding sales for drugs, no longer protected by patents that once earned Pfizer billions annually. It is for that reason that the company is pursuing a so-called method of use patent for its arthritis pill Celebrex. The drug belongs to a class of drugs called COX-2 that helps lower pain for arthritis patients by blocking a chemical reaction in the body that causes inflammation.

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