Blog reader Jim Mooney emailed me yesterday saying I'm biased against Pfizer.
"You continue--day after day--to knock the company at every opportunity. I understand you had a difficult relationship with the CEO before, but you shouldn't hold a grudge against the company for it. A fair reporter like yourself should always be impartial. As a long suffering PFE shareholder, I would appreciate if you FINALLY (the caps are his) said something positive about PFE," he wrote.
Jim, I'm just reporting what's happening in the market. And when shares of the world's biggest drug company continue to hit nearly 11-year lows, even on a day like today when the rest of the sector is rallying, and The Wall Street Journal does an article this week about the PFE dividend possibly being at risk, that's a story. Executives have said the big dividend (between a six and seven percent yield) is safe, but investors appear to be worried that it might not be.
And then to make matters worse, this morning James Kelly at Goldman Sachs took Pfizer off of the "Americas Conviction List" and added Eli Lilly to replace it. That's on top of a Cowen and Company upgrade of LLY yesterday.
Kelly is downgrading PFE from Buy to Neutral (Hold) and upgrading LLY to Buy from Neutral. He also eats a little crow in his research note to clients. "Since Pfizer was added to the Americas Buy List on January 4, 2007, the share price has fallen 28.7 percent, versus a 2.9 percent decline in the S&P 500 and a 20.4 percent decline in our coverage universe," Kelly writes.
But wait, there's more. "Since the shares were added to the Conviction List on October 24, 2007, they have gone down 21.6 percent versus a 9.1 percent decline for the S&P 500, and over the past 12 months, the share price has declined 31.7 percent compared to a 10.5 percent fall for the S&P 500," he adds.
Kelly likes PFE's valuation, although he's dropping his price target from $26 to $22. But he has fundamental issues. "Near-term pipeline products decrease in value and recent safety issues pressure our Chantixand Sutent (a cancer drug) forecasts. Further, the key launches in the base business have begun to deteriorate (notably Sutent, Chantix and now potentially Lyrica), which is important to our view." Lyrica is a drug for nerve pain and fibromyalgia.
GS has done and wants to do more banking for Pfizer and Lilly . It also makes a market in the shares of both companies. And a retired GS Vice-Chairman sits on the PFE Board.
I'm off tomorrow to sit on a drug industry-focused panel at the Investigative Reporters and Editors convention in Miami. And from there, onto the American Diabetes Association meeting in San Francisco. I'll actually be reporting live from ADA on Monday and Tuesday because the once-a-week Byetta data (say that five times fast) from LLY, Amylin and Alkermes don't come out until Monday night. We're hoping to do a live, First on CNBC interview with Amylin's CEO Dan Bradbury first thing Tuesday morning.
And, oh, Mr. Mooney, I think Pfizer Chairman and CEO Jeff Kindler and I are just fine.
Questions? Comments? Pharma@cnbc.com