Replies to post #124251 on Biotech Values

[mcbio]

On the subject of big pharma being undervalued by the market, does AZN really have a 7.6% dividend yield? I'm going off Yahoo data, which is admittedly prone to errors. But, if that's accurate, any thoughts on AZN's valuation specifically? While I realize that dividend yield isn't the be-all-end-all metric to look at when it comes to stock prospects, as it means little if the stock itself is overpriced and prone to tumble or if the dividend is about to be cut, that's quite a yield if it's accurate (most big pharma are 3 - 5%).

[masterlongevity]

how would you rank order your top 3 big pharma buys at current valuation?

1) NVS
2) ABT
3) PFE

[DewDiligence]

Re: Effect of Viagra decision on PFE’s valuation

US Viagra sales in 2Q11 had an annualized rate of exactly $1B, which is 1.5% of PFE’s total annual worldwide revenue from all sources. However, Viagra in the US market has a higher profit margin than PFE’s average for all products, so the contribution of US Viagra to PFE’s overall profits is presumably in the 2-3% range.

An additional 2-3% of profit for an extra seven years is not a huge difference maker, but it will help PFE meet its EPS guidance for 2012 (#msg-65791666).

[DewDiligence]

PFE’s 2012 non-GAAP EPS guidance is $2.20-2.30, a reduction of $0.05 relative to the prior range (#msg-65791666) that is entirely due to the effects of foreign exchange. (I.e. the US Dollar has strengthened relative to most major currencies since the prior EPS guidance was issued, which reduces PFE’s 2012 foreign earnings when expressed in dollars.) Here is PFE’s 4Q11 PR:

http://ih.advfn.com/p.php?pid=nmona&article=50964778

At the $2.25 midpoint of the new 2012 guidance range, PFE is trading at a P/E of only 9.6x; it remains a compelling buy, IMO, despite having been one of the best performers in the S&P 500 during the past year or so.

As has been stated on this board ad nauseam, PFE is a strong beneficiary of The Global Demographic Tailwind. Regardless of what happens with PFE’s pipeline of patented drugs—which includes such standout opportunities as Eliquis and Tofacitinib—PFE will make a lot of money selling branded generics in emerging markets.