Biotech Values

[DewDiligence]

Musings on PFE’s valuation:

PFE kept non-GAAP EPS guidance for 2011-2012 unchanged following today’s 2Q11 report. The ranges are as follows:

2011: $2.16-2.26
2012: $2.25-$2.35

The midpoint of the 2012 range represents a P/E of only 8x. Hence, investors must be thinking that either: i) the 2012 EPS range won’t be met; or ii) there will be negative EPS growth in the period starting in 2013. I don’t think either i) or ii) will come to pass, so it follows that I consider PFE a pretty good buy at the current price.

As has been stated ad nauseam (e.g. #msg-59590951), PFE is a strong beneficiary of The Global Demographic Tailwind. PFE’s 2Q11 sales in emerging markets had an annualized rate of about $13B, which is roughly 20% of PFE’s overall sales. 2Q11 sales in emerging markets grew strongly year-over-year despite the loss of patent protection in some countries on such key brands such as Lipitor and Viagra.