Friday, September 30, 2005

Comatosed: Pfizer Shareholders Eat Dirt

Everybody owns at least one stock that, deep down, they know is dogshit but continue to hold onto anyways.

For us, its Pfizer, which we own for the family portfolio.

We certainly weren't jumping for joy on Friday morning when the New York Times reported that, going forward, Pfizer's shareholders should expect nothing less than more pain and anguish:

A lawsuit filed on Wednesday against Pfizer claiming that it oversold the benefits of its anticholesterol medicine Lipitor is only the latest hurdle facing the company as it tries to get its sales back on track and regain Wall Street's affection. Its stock is near an eight-year low, as investors nervously await a decision in a patent lawsuit that could open Lipitor, the world's top-selling drug with sales of $11 billion last year, to generic competition four years before Pfizer had planned.

...the Food and Drug Administration this month rejected two drugs from Pfizer, Oporia, an osteoporosis treatment, and Dynastat, an injectable painkiller. Analysts are sharply split on the prospects for another new Pfizer medicine -- Exubera -- a type of insulin that can be inhaled rather than injected.

Pfizer, like Citigroup, has kept its shareholders in the house of pain for several years.

How come?

Pfizer spends more than $7 billion annually on R&D, and yet its drug pipeline remains anemic.

The bulls find PFE attractively valued.

No doubt PFE is dirt cheap, but the fact of the matter is that Pfizer is losing the batttle to generic competitors.

Two of its blockbuster drugs lose patent in 2007.

And these lawsuits are stinking the room up the way Merck's early troubles cleared the floor.

Nine out of ten analysts who cover the stock have a hold or buy on PFE.

Apparently these guys aren't bothered by the fact that CEO Hank McKinnell sold $20 million dollars worth of stock in the open market (on or around August 16) .

But we won't entertain such insouciance.

Sell Rating on PFE until the dust settles.

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