Will Pfizer Inc. (PFE) Stock Soar or Sink for the Rest of 2013?

Pfizer Inc. (NYSE:PFE) stock is off to a fine start in 2013. It might have gotten a bit ahead of itself earlier this year, but Pfizer stock has matched the S&P 500 for the year. For a large pharmaceutical company, you can’t ask for too much more.

PFE Chart

PFE data by YCharts.

Of course, past performance is rather meaningless as an investment thesis. The more important question is whether Pfizer Inc. (NYSE:PFE) stock will do well in the second half of the year.

Pfizer Inc. (NYSE:PFE)

Free bird

I like the slimmed-down version of Pfizer Inc. (NYSE:PFE) after it sold its nutrition business, and spun out its animal health business into Zoetis Inc (NYSE:ZTS).

The company allowed shareholders to trade in Pfizer stock for shares in Zoetis. More shareholders took Pfizer Inc. (NYSE:PFE) up on the deal than the company had shares of Zoetis Inc (NYSE:ZTS), resulting in a pro-rata exchange based on the number of shares investors were interested in exchanging.

After the exchange is complete, Pfizer Inc. (NYSE:PFE) won’t be able to include its portion of Zoetis’ earnings on its profit statement, but it’ll have a lower share count, which will more than make up for the lower earnings, resulting in higher earnings per share starting next year.

New drugs

With Pfizer shrunk down, the development of its pipeline becomes more important for the growth of Pfizer stock.

Of the recent drugs launched, Pfizer’s oral rheumatoid arthritis drug Xeljanz is probably the most important, given its blockbuster potential. In the first full quarter on the market, sales of Xeljanz were $11 million. Not a bad start, but a far cry from AbbVie Inc (NYSE:ABBV)‘s Humira, which had $4.3 billion in sales in the first quarter!

To reach that kind of sales number, Pfizer needs to expand Xeljanz into additional indications; Humira is approved for seven different autoimmune diseases. Pfizer is pushing Xeljanz in that direction, with phase 3 trials for psoriasis and psoriatic arthritis.

As an oral drug, Xeljanz should be able to trounce Humira and the other two anti-inflammatory mega blockbusters — Johnson & Johnson (NYSE:JNJ)‘s Remicade, and Amgen, Inc. (NASDAQ:AMGN)‘s Enbrel — because they have to be injected or infused. But doctors have a lot of experience with the three drugs, which all work on the same TNF-alpha pathway. It’s going to take time for Pfizer to get doctors comfortable with prescribing Xeljanz, which works through a different pathway called JAK.

Next up: Earnings

Investors will have to wait a month until the July 30 earnings announcement to get a better idea of where Pfizer stock might go in the second half. I think owners of Pfizer stock should be happy if the share price can get through the year matching the S&P500, while working through its post-Lipitor funk, especially since investors get to collect a dividend while they wait for better times.

The article Will Pfizer Stock Soar or Sink for the Rest of 2013? originally appeared on Fool.com and is written by Brian Orelli.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!