I thought the dust had pretty much settled on the Pfizer-Wyeth story. Then this morning two analysts coincidentally put out research notes on it. One of them is upgrading PFE to the equivalent of a "Buy" rating. But the other is lowering his target price on PFE by a buck.
First, the bull case. Seamus Fernandez at Leerink Swann is raising PFE from "Market Perform" to "Outperform."
He says the stock is cheap, but he also thinks Pfizer could raise its earnings guidance for this year, that its long-term "strategic positioning" has "dramatically improved" and the late-stage drug development pipeline could be poised to bust out from 2010 to 2013. Leerink Swann may trade in PFE and WYE.
And now the bear case. Dr. Tim Anderson at Sanford C. Bernstein says PFE's purchase of WYE helps fill the financial hole created when PFE's Lipitor goes generic in a couple of years.
But he believes the deal will cost the company in all-important research and development productivity. And Dr. Anderson quotes Pfizer Chairman and CEO Jeff Kindler on that very issue from last year's analyst meeting when Kindler explained why he didn't think mega-mergers work in big pharma. "Look, the Warner-Lambert and Pharmacia transactions brought us a lot of things," the research note to clients quotes Kindler as saying in March 2008. "But they took a long time to integrate, they were extremely disruptive...you can't get around the fact that it impacted our R&D productivity." In an accompanying voicemail blast to clients this morning, Dr. Anderson said, "I almost wonder if Pfizer is caught in a slow, vicious M&A (merger and acquisition) cycle whereby every handful of years it'll have to buy another company to keep growing." Anderson is cutting his PFE price target from $18 to $17. A part of Bernstein owns at least one percent of PFE and WYE and one of the guys on Anderson's team is long PFE.
Pfizer says the new company will still be called Pfizer, but we can still have fun with alternative possibilities. (A couple of these names were originally on , but they're too good to let go.)
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