It’s understandable that investors are lured into buying Bristol-Myers, Eli Lilly & Co. (NYSE:LLY), and Pfizer. At the same time, it’s important to remember that those dividend yields will rise if share prices fall. Investors who are willing to exercise patience might be able to secure yields closer to 4% should the disappointing underlying results finally catch up to these stocks’ share prices.
Furthermore, investors who blindly chase high-performing stocks just for the sake of yield may be making a mistake. Unfortunately, large-cap big pharma stocks aren’t offering growth rates to justify their huge rallies, and as a result, investors would be wise to view the industry with caution.
Specifically, Pfizer has rallied significantly despite offering little underlying growth. Going forward, the picture remains extremely cloudy as a result of the company losing Lipitor patent protection. I’m not willing to pay 19 times 2013 earnings for a company losing exclusivity on its best-selling product, and I’d advise investors to follow suit and wait for a meaningful pullback before jumping in.
The article Is Pfizer a Buy? originally appeared on Fool.com.
Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.