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Why M&A Doesn't Make Sense For Pfizer Anytime Soon

Why M&A Doesn't Make Sense For Pfizer Anytime Soon
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In a report published Wednesday, Bank of America analyst Colin Bristow detailed an investor meeting held with Pfizer Inc. (NYSE: PFE)'s CEO Ian Read and other key senior executives.

According to Bristow's meeting, Pfizer noted that one (or several) transformative M&A deal is "highly unlikely" given the ongoing discussions in Washington surrounding corporate tax reform. Until further clarity is provided (perhaps in three to four months), Pfizer may consider smaller acquisitions.

The analyst continued that Pfizer would "favor" a deal on the innovative side, though future M&A activity is also possible on the established product side but wouldn't be one of the size and scope of the Hospira deal.

Related Link: Healthcare M&A: Who Will Be The First Domino To Fall?

The company further said that an acquisition would require to satisfy three conditions: 1) a de-risked growing revenue profile, 2) a pipeline that would bridge Pfizer's pipeline gap between now and 2017/2018, and 3) a deal that facilitates significant synergy realization.

Finally, Pfizer acknowledged it does not see an acquisition as being critical pre-split, but the company remains committed towards maximizing the value of its businesses.

Pfizer's Assets Update

Switching over to Pfizer's assets, the company cited Ibrance as its most underappreciated assets with a high potential in the near-term. On Immuno-oncology, the company believes the market will move to combination therapy approaches and its current portfolio is "well-positioned" with its 4- 1BB agonist being a potentially best-in-class asset while OX40 is high-potential asset.

On bococizumab, Pfizer stated it believes the opportunity for PCSK9 will remain modest until further outcome data becomes available. Finally, the company said it has several neurology assets in development including a D1 agonist, gamma secretase modulator and 5HT6 antagonist for Alzheimer's disease and a glial cell line-derived neurotropic factor (GDNF) therapy for Parkinson's disease.

Shares of Pfizer remain Buy rated with an unchanged $36 price target.

Latest Ratings for PFE

Oct 2017BMO CapitalMaintainsOutperform
Sep 2017Morgan StanleyUpgradesEqual-WeightOverweight
Aug 2017BMO CapitalUpgradesMarket PerformOutperform

View More Analyst Ratings for PFE
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Posted-In: Bank of America Colin Bristow Corporate Tax Reform HospiraAnalyst Color Health Care Analyst Ratings General Best of Benzinga


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