Pfizer (NYSE: PFE), a pharmaceutical entity whose colleagues include Merck (NYSE: MRK), Novartis (NYSE: NVS), and Johnson & Johnson (NYSE: JNJ), will be reporting first-quarter earnings Tuesday. As one has come to expect, the market believes that the company will be experiencing a decline in bottom-line income. The call is for 49 cents per share versus 61 cents per share in the year-ago period.
That's a drop of 20%. That might not sound so hot, but the good news is that Pfizer has a solid recent track record when it comes to beating earnings expectations. So shareholders might be justified in feeling confident about that aspect of the game.
Pfizer was involved in a recent buyout transaction. Management decided that it was in the company's best interest to offer $64 billion for Wyeth (NYSE: WYE). Tom Taulli reported on Pfizer's successful bond offering back in March. As he stated, Pfizer needed to bring in some cash for the deal.
It's all about the quality of the pipeline when it comes to big pharma. In fact, Steven Halpern brought us highlights of an analyst's comments about Wyeth and its potential effect on Pfizer. The expert doesn't believe that Wyeth's assets will make Pfizer fully whole.
However, it still seems to be part of the solution. And if the transaction can quickly add to the bottom line, then the hope is that the dividend, which was recently cut, might be upped again at some point (personally, I don't think shareholders should hold their collective breath on that count).
So, Pfizer is currently within a couple bucks of a 52-week low. There are those out there who believe the company's shares may represent long-term value. They probably do. But I don't have any interest in buying this name ahead of its earnings. I think there might be better plays out there.
With the dividend cut, questions about the pipeline, the Wyeth deal, etc., I just don't feel that now is the time to be adding Pfizer to a portfolio. The stock has been weak, and my gut says it could remain in a challenged state. As always, we'll see what happens.
Disclosure: I don't own any company mentioned; positions can change without notice.
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