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Pfizer: Does Corporate Cash Rule Pharma Right Now?

This has been a lousy summer for investors in Pfizer. The stock traded at nearly 28 bucks in June and today it's fighting its way back up over the $24 mark.

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Goldman Sachs big pharma analyst James Kelly in a research note to clients is reiterating his buy rating on the shares, but is lowering his 12-month price target from $30 to $29. The title of his note is "High yield could provide a haven in market turbulence".

He goes on to write that PFE's dividend yield is now almost 5%. "This is among the highest levels Pfizer shares have seen, and it is currently the highest yield in the sector," Kelly says. And he reminds investors that as of June 30th of this year PFE has $22 billion in cash and short term investments which "should allow the company to fund any necessary acquisitions."

NOTE: Goldman Sachs has done and wants to do more investment banking for PFE, makes a market in the stock and a Director of PFE also sits on the Board of GS.

Kelly's call comes in the wake of a piece in Barron's over the weekend headlined, "Rx for Hard Times: Merck and Lilly." Johanna Bennett writes that the sector has had its share of troubles, but "these days, corporate cash rules".

To her point, she reports that big pharma has $29 billion in cash sitting on its books and that Morgan Stanley analyst Jami Rubin thinks that could grow to $127 billion by 2011. Money the companies could use to buy back more stock. At least the industry sees value in itself.

Questions? Comments? Pharma@cnbc.com