Skip to Content
Morningstar

Pfizer, Merck Below Expectations but Well Positioned

Pfizer, Merck Below Expectations but Well Positioned

Damien Conover: Big pharma earnings are coming to an end for the first-quarter results, and Pfizer and Merck reported today. Both results came in a little bit below both what we, and the Street consensus were anticipating. There were some stocking issues and some generic threats that caused some of the top line to come in a little bit below what we were anticipating. Nevertheless, we think both companies are very well-positioned going forward, and we think both stocks are undervalued. While the stocks are trading down right now because of the short-term miss, we think over the long-term are very well-positioned with their pipelines and very strong pricing power with a lot of the drugs, which was evidenced in the quarterly earnings today.

Beyond what we see as strong capital appreciation for these names, we also see a very strong dividend yield, above 3% for both stocks. The earnings today reaffirm our belief that despite some of the generic competition and some of the headwinds in the industry, both firms will be able to support a very strong dividend yield. Beyond the dividend yield we anticipate there will also be strong capital appreciation.

MORN DODFX VINIX VWILX TSVA EGO WU Brightstart429plan MRO VZ MOAT T NKE CMCSA GOOG

More in Stocks

About the Author

Damien Conover

Sector Director
More from Author

Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

Damien Conover, CFA, is the director of healthcare equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is also director of equity strategy, responsible for helping to shape, package, and surface research based on Morningstar’s investment philosophy by working closely with the firm’s sector strategists and directors.

Before joining Morningstar in 2007, Conover was an equity research analyst covering the healthcare sector for Raymond James, Bank of Montreal, and Tucker Anthony.

Conover holds bachelor’s and master’s degrees in finance from the University of Wisconsin and was a member of its Applied Security Analysis Program. He also holds the Chartered Financial Analyst® designation.

Sponsor Center