Biotech Values

[DewDiligence]

Analyst, Jami Rubin has things backwards with respect to PFE, IMO:

http://www.bloomberg.com/news/2013-02-07/pfizer-breakup-talk-stoked-by-discount-to-drug-stocks-real-m-a.html

Goldman Sachs analyst Jami Rubin estimates that by valuing Pfizer’s innovation and generic businesses separately and applying trading multiples based on peers to her 2013 earnings forecast for each unit, the company is worth $32 a share. That implies an equity value of about $236 billion, a 17 percent premium to its market capitalization yesterday.

“Pfizer’s value business is dragging down the value of its drug business, which would be better recognized if the businesses were fully separated,” Rubin wrote in a note to clients last week.

Actually, I think the PFE’s branded-drug business is dragging down the valuation of the rest of the company, much as ABBV was dragging down the valuation of the pre-separation ABT.