Pfizer (PFE): Ibrance is the Story, Not the Split - Piper Jaffray

Piper Jaffray analyst, Richard Purkiss, reiterated his Overweight rating on shares of Pfizer (NYSE: PFE) and believes that the real story is not the split, its Ibrance. Whilst a split into Innovative/Established companies might unlock trapped value at some point for PFE, the collapse in generic company valuations in the last year limits the nearterm upside achievable on a Sum of Parts (SoP) analysis. Given Ibrance is by far the dominant driver of PFE's earnings in the next decade, the analyst thinks Ibrance is the overriding reason to own PFE...not the split.

The analyst has previously flagged Ibrance as the key driver of revenue upside for PFE and models 2023 Ibrance revenue at $12.9B vs consensus at $7.7B. Importantly, the incremental margin attached to the $5.2B of revenue above consensus would likely be ~double PFE's group operating margin generating substantial leverage. Moreover, Ibrance's higher growth vs the rest of PFE's drug portfolio should add significant tax benefits over time given its Irish intellectual property base.

No change to the price target of $54.

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 $36.74 yesterday.

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