Tuesday, May 15, 2012

Investing In Pfizer Inc.

In the past year Pfizer (PFE) has moved pretty close with the Dow.  When stocks crashed last summer so did Pfizer but it did recover fairly well. From December 2011 it has taken off and it has outperformed the Dow. Although the company lost some revenue due to the expiration of some of its best selling drug patents it has mostly stayed in the green and has not dropped much despite European news worries. Pfizer gets about a quarter of its revenue from Europe.

In the first quarter of 2012 Pfizer reported higher than expected earnings thanks to Lyrica.  This helped counteract Lipitor sales which fell by 42%. The market has continued to pick up the stock, the feeling is that if the loss of Lipitor one of the biggest drugs in the world only led to a 3% loss per share then Pfizer must be on the right track. Pfizer is awaiting approval for 2 blockbuster treatments Eliquis and Tofacitinib. Overall Pfizer's sales were solid and sales of older drugs were mostly higher. Pfizer plans to extend the use of its antidepressant Pristiq to treat depression in women with menopause.

Trading at 22.30 and with a dividend yield of 3.90 it offers a good play for those who want to diversify their portfolio. Volatility has been picking up especially in the financial stocks.  European concerns that won’t go away point to a tough summer.  We may repeat the roller coaster ride we had last year or even worse if Greece is dropped from the eurozone, but adding this pharmaceutical with a beta of .70 can be a good move going forward as this stock has good possibilities in the long term.  One thing to keep in mind is that when major European indices drop one can usually find a pharmaceutical as one of the day’s top performers.

Healthcare & Big Pharma Stocks are good buys during hard economic times.  In the coming years innovation will help companies find effective treatments at a faster pace. Pfizer was able to speed up the clinical trials and bring to market Xalkori in 4 years instead of having to wait decades using the research models of the past. This is a new era that will lower the astronomical costs of drug testing and will allow companies to bring drugs to patients at record speed.  As Pfizer focuses on treating more promising diseases such as cancer and Alzheimer's picking up the stock on these market drops is a good idea.  

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