Pfizer (PFE) Ratings, Outlook Affirmed by S&P Following Recent Review

November 29, 2016 10:17 AM EST

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S&P Global Ratings today affirmed its 'AA' corporate credit and senior unsecured debt ratings, as well as its 'A-1+' short term and commercial paper rating, on Pfizer Inc. (NYSE: PFE). The outlook is stable.

New York City-based Pfizer is one of the largest pharmaceutical companies in the world, benefiting from a diverse portfolio of high-margin pharmaceuticals, with particular strengths in neurology, oncology, and vaccines. The portfolio is also backed by an improving product pipeline, bolstered recently by its acquisitions of Medivation Inc. and Anacor Pharmaceuticals Inc., both in 2016, and holds the promise of an ongoing stream of new products. Pfizer's sheer size and diversity also provide a significant competitive advantage. This top-line business risk profile is supported by a modest financial risk profile and policy, highlighted by expected long-term adjusted net leverage of 1.5x-2.0x.

Our stable rating outlook reflects the expectation that cash flow will continue to exceed internal needs and dividends, and enable the company to conduct share repurchases without significant deterioration to its credit measures.

A downgrade would require an unanticipated, dramatic negative industry development, such as price controls, or a shift to a more-aggressive financial policy. We believe that Pfizer currently has limited debt capacity at the current rating, and that any acquisition or share repurchase that would likely lead to leverage being sustained in excess of 2x over the next two years could prompt consideration for a downgrade.

We would consider an upgrade should Pfizer restore its financial leverage to a level that is consistently under 1.5x and refrain from pursuits that could materially affect its credit measures, such as considering a potential breakup of the company (which it has contemplated in the recent past).



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