Pfizer: Paying Too Much To Boost Revenues (Archive)
Pfizer’s rich M&A bets risk turning Seagen into an expensive capital allocation mistake.
This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.
Elevator Pitch
- Pfizer has generally paid high prices for M&A, above industry norms (20x vs 10x EV/Revenue deal multiples).
- Oncology has been a lagging business for Pfizer despite being a hot growth area (1.5% 3-yr CAGR for Oncology vs 4.5% 3-yr CAGR for non-COVID related revenues).
- Seagen may boost Oncology sales but the price paid is hefty (22.7x EV/Revenue, implied ~15x PE; 44% premium to sectoral 1-yr fwd PEs).
- Management's execution record has been patchy; multiple guidance cuts and margin misses in FY23 due to overestimations of COVID-related sales.
- Pfizer is relatively more expensive vs its peers (19.9x 1-yr fwd PE vs 14.5x 1-yr fwd PE of peers), reducing the margin of safety for buys.
Read the full article here.
Disclosures and Disclaimers
Past performance ≠ future results. Not investment advice. See full Disclaimer.
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