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Berenberg Unimpressed With Pfizer, Initiates Coverage At Hold


Earlier Thursday, Berenberg's Allstair Campbell initiated coverage on Pfizer Inc. (NYSE: PFE) with a Hold rating and set a price target for $38.00.

Campbell noted there was "steady if unspectacular growth" inside the company. "We expect Pfizer to deliver mid-single-digit earnings growth in the medium term, with pipeline and growth products more than offsetting patent headwinds" Campbell said.

The company is looking at plans to release value through a split of the business after a slashed M&A deal with Allergan (NYSE: AGN).

Analysis of Pfizer's top line shows major patent headwinds. Lyrica is still patent protected, but will lose its patent in 2018. Viagra is nearing the end of its protection as generics are expected to be released in early 2018.

"Enbrel now faces biosimilar competition in Europe and Merck & Co., Inc. (NYSE: MRK)'s experience with Remicade suggests significant erosion is inevitable" Campbell stated. These products as a whole will account for $6.7 billion of lost sales.

There is good growth outlook for Ibrance, Eliquis and Xejianz, which will drive growth to offset the headwinds posed by patent exclusivity running out. The analyst viewed "Ibrance as the "jewel in the crown" as it "looks set to become a $5.8 billion product."

Pfizer has 10 new products in phase III trials. All of which, pending approval, could drive growth for Pfizer in light of the loss of its highly successful Lyrica, Viagra, and Enbrel.

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