Merck & Co., Inc. (MRK), Novartis AG (ADR) (NVS), Pfizer Inc. (PFE): Six Big Pharma Stocks With Lower Credit Risk Than U.S. Treasuries: Part II

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Pfizer Inc. (NYSE:PFE), the world’s largest pharmaceutical company, currently pays a dividend yield that is 117 basis points below the company’s five-year average yield. This is so because of a cumulative 44% gain in its stock price over the past five years. Following patent expiration for Lipitor in 2011, sales of this cholesterol drug that once were as high as $13 billion have been plunging. Its atypical antipsychotic drug Geodon also saw lower sales following patent expiration in 2012. Still, strong performance of pain drug Lyrica has been making up for some of the revenue losses.

Recently, Pfizer Inc. (NYSE:PFE) revised lower its outlook for 2013 to reflect the impact of the weaker Japanese yen and the Zoetis IPO. Still, a positive development is the FDA approval of Pfizer Inc. (NYSE:PFE)’s two new potential blockbusters, the anticoagulant drug Eliquis and the rheumatoid arthritis drug Xeljanz. Pfizer Inc. (NYSE:PFE) has a pipeline of 78 products, including 17 products in Phase III trials and seven in registration. In terms of valuation, the stock is trading at 13.4x forward earnings. Last quarter, Tiger Cub hedge funder Rob Citrone was bullish about Pfizer Inc. (NYSE:PFE).

Final thoughts

While the past few years have been tumultuous for earnings of many drugmakers, due to steep patent cliffs, the situation has started to improve. What’s more, many pharmaceutical majors boast strong product pipelines, with potential blockbuster drugs in the making that have a potential to lead to ample cash flows in the future.

Disclosure: none

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