PFE Q4 Results Preview

Analyst Eric Lo of Bank of America Merrill Lynch maintains his "buy" rating on Pfizer Inc (NYSE: PFE). The target price for PFE is set to $21.

Pfizer is scheduled to report its Q4 results on February 3. Bank of America Merrill Lynch’s expectations are:

Sales – up 29% to $15.8bn with WYE contributing $3.8bn in sales.

Margins – affected by the acquisition, with gross profit of 81.0% (down -730 bps yoy), SG&A of 28.6% (up +10 bps yoy) and R&D of 17.3% (down -70 bps yoy).

EBIT – up +8% to $5,555mn with margins of 35.1% vs. 41.8% in 4Q:08A.

EPS – upside to estimate of $0.48 (down -27% yoy) mainly from better expense management.

“We believe the current market valuation (8.1x 2011 EPS of $2.30) does not appropriately reflect PFE’s FCF generation capabilities, opportunities to create shareholder value and efforts to diversify its sales mix,” the analysts say.

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