Jefferies Upgrades Pfizer (PFE) to Buy, $38 PT

February 4, 2014 6:59 AM EST
Get Alerts PFE Hot Sheet
Price: $32.52 -0.25%

Rating Summary:
    13 Buy, 12 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Jefferies upgraded Pfizer (NYSE: PFE) from Hold to Buy with a price target of $38.00 (from $33.00).

"Oncology and restructuring are key themes for the Pharma sector. Pfizer has both with palbociclib looking like it could launch before year end, whilst management look to give increased visibility on a new organizational structure from Q1'14," analyst Jeffrey Holford, PhD, said. "We have upgraded the shares to Buy as we expect the market will soon reflect incremental value in the shares for these drivers."

The analyst said Palbociclib looks misunderstood and under-appreciated. "We think that many commentators are overly obsessed with a potential need for Overall Survival data from the PALOMA-1 study to gain accelerated approval for palbociclib in breast cancer," the analyst said. "We believe that the strength and magnitude of the PFS data from this study will be sufficient for filing and potential approval by year-end 2014, especially when considering that it already has Breakthrough Therapy designation from the FDA. We now fully discount a launch from 2015 in our estimates with peak sales of $6bn and include c$4.2bn of revenues by 2018E versus consensus of $1.8bn."

Also, restructuring looks increasingly likely as visibility increases. "The strategic options being potentially pursued could result in a number of different future structures and timelines attached to them. We expect that the increased visibility, operational efficiency and improved taxation structure that may come with a reorganization will result in increased shareholder value."

The firm raised FY 2014 EPS from $2.24 to $2.27 and FY 2015 EPS from $2.33 to $2.37.

For an analyst ratings summary and ratings history on Pfizer click here. For more ratings news on Pfizer click here.

Shares of Pfizer closed at $30.60 yesterday.

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