Pfizer (PFE) Can Go Further to Unlock Value - Goldman Sachs
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Price: $25.74 -0.66%
Rating Summary:
13 Buy, 20 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 14 | New: 50
Rating Summary:
13 Buy, 20 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 14 | New: 50
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Goldman Sachs commented on additional stages of a potential breakup for Conviction Buy List-rated Pfizer (NYSE: PFE) after meeting with CEO Ian Reed.
The firm notes the CEO is open to further separations beyond Animal Health and Nutrition if the conditions make sense. While they see no P/E arbitrage now to warrant a separation of the Pharma and Generics businesses, they see the potential creation of such a scenario if the company's pipeline proves successful.
The firm sees three stage of a potential full breakup of the company.
1. The divestitures from the announced separation of Animal Health and Nutrition will be used for buybacks, which could drive $0.18 in EPS accretion.
2. This could include the the disposals of the Pharma and Generics businesses. They see business reporting structure of these units being re-characterized and unit leaders laying out goals to optimize each business. The firm's With a Sum-of-the-parts valuation under this scenario is $26
3. A full breakup. This could take take two or three years to build the stand-alone potential of the two businesses and depends on the drug pipeline's success. In a bull case, pipeline success could drive $5.7B in additional sales, $0.93 in EPS accretion, and a Sum-of-the-parts valuation of $33. A break-up could drive further upside to $37.50 on a Pharma multiple expansion.
Goldman reiterated their Buy rating and $26 price target on the stock.
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 $22.16 yesterday.
The firm notes the CEO is open to further separations beyond Animal Health and Nutrition if the conditions make sense. While they see no P/E arbitrage now to warrant a separation of the Pharma and Generics businesses, they see the potential creation of such a scenario if the company's pipeline proves successful.
The firm sees three stage of a potential full breakup of the company.
1. The divestitures from the announced separation of Animal Health and Nutrition will be used for buybacks, which could drive $0.18 in EPS accretion.
2. This could include the the disposals of the Pharma and Generics businesses. They see business reporting structure of these units being re-characterized and unit leaders laying out goals to optimize each business. The firm's With a Sum-of-the-parts valuation under this scenario is $26
3. A full breakup. This could take take two or three years to build the stand-alone potential of the two businesses and depends on the drug pipeline's success. In a bull case, pipeline success could drive $5.7B in additional sales, $0.93 in EPS accretion, and a Sum-of-the-parts valuation of $33. A break-up could drive further upside to $37.50 on a Pharma multiple expansion.
Goldman reiterated their Buy rating and $26 price target on the stock.
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 $22.16 yesterday.
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