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Goldman Reinstates Coverage On Pfizer And Allergan Following Failed Merger

Goldman Reinstates Coverage On Pfizer And Allergan Following Failed Merger
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The collapse of the $160bn merger between Pfizer Inc. (NYSE: PFE) and Allergan plc Ordinary Shares (NYSE: AGN) added to the burgeoning total value of deals abandoned in 2016. Goldman Sachs’ Jami Rubin reinitiated coverage of both the stocks in separate reports.


Analyst Jami Rubin reinitiated coverage of the company with a Neutral rating and a price target of $35. He commented that the company seems to be stuck “between a rock and a hard place.”

Pfizer is likely to turn to traditional M&A ahead of its proposed breakup of the company by yearend 2016. “While we had long been advocates of a break up, we believe the current share price yields limited trapped value, thus diminishing the upside,” Rubin wrote.

Related Link: Favus Gives 10 Reasons To Sell Allergan

Pfizer has probably been one of the most proactive companies to execute on various strategies to unlocking value. The analyst added, however, that there was lack of clarity regarding the strategy for the GEP business, and limited upside could make a break up “less favorable.”


Rubin initiated coverage of the company with a Buy rating and a price target of $275. Since the termination of the merger with Pfizer, Allergan’s shares have declined 21 percent, versus a 1 percent gain in the XLV.

The current share price does not seem to reflect any value for either the generics business nor for the ~$30 bn cash from the proposed sale to Teva Pharmaceutical Industries Ltd (ADR) (NYSE: TEVA), the analyst said.

“We see significant upside irrespective of deal close, from either the generics EPS or optionality from capital allocation,” the Goldman Sachs report stated.

Latest Ratings for PFE

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

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Posted-In: Goldman Sachs Jami RubinAnalyst Color Long Ideas Initiation Analyst Ratings Trading Ideas Best of Benzinga


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