Analyst Corner: Hold on Pfizer with a target price of Rs 3,540

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New Delhi | Published: September 25, 2018 12:18:52 AM

Driven by its focus on brand leadership in existing therapies, maintaining its market share of acquired brands such as Neksium and Meronem, Pfizer, we believe, is on the cusp of recovery.

Analyst Corner: Hold on Pfizer with a target price of Rs 3,540

Driven by its focus on brand leadership in existing therapies, maintaining its market share of acquired brands such as Neksium and Meronem, Pfizer, we believe, is on the cusp of recovery. We expect revenue/PAT CAGRs of 14%/17% over FY18-21. However, with the limited potential from valuations, we initiate coverage with a ‘hold’ rating and a target price of Rs 3,540. With a proven record of building market-leading brands, greater revenue, we believe, would be generated from its established brands. Traction in Dolonex, Magnex and Mucaine and consistent performance in its emerging therapies would be its key revenue drivers. (Twelve of its brands are leaders in their categories. Prevenar 13, Becosules, Corex-Dx/T, Gelusil are some of the most popular brands in the country.) We expect a 14% revenue CAGR over FY18-21. On its merger with Wyeth, Pfizer further solidified its position as one of India’s largest pharma MNCs with a high market presence and brand recognition. On acquiring products such as Neksium and Menorem from AstraZeneca, it has further strengthened its position in anti-infective and gastrointestinal therapies. Besides, it is expected to launch two antibiotics in India shortly, Zinforo and Zavicefta.

For the past two years, Pfizer has been battling issues such as price control, those around its product Corex as well as the GST roll-out in FY18, leading to deceleration in its revenue growth. We believe that it, having left these hurdles behind, is on the verge of recovery. We initiate coverage on Pfizer, while recommending a hold due to restricted potential from current levels, with a target of `3,540 based on 28x FY21e earnings.

By- Anand Rathi

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