Buy Pfizer; target of Rs 4740: ICICI Direct

ICICI Direct's research report on Pfizer

Q4FY20 revenues declined 6.3% YoY to Rs 502 crore due to divestiture of certain brands and Covid-19 related challenges (adjusted growth ~4%). EBITDA margins contracted 653 bps to 21.7% YoY due to higher raw material and personnel costs. Subsequently, EBITDA came in at Rs 108.7 crore, down 28% YoY. Net profit de-grew 5.9% YoY to Rs 103 crore. In FY20, revenues grew 3.4% YoY to Rs 2152 crore (adjusted growth ~6%). EBITDA margins declined slightly by 54 bps to 26.6% with EBITDA remaining flat at Rs 573 crore (Rs 565 crore in FY19). However, net profit grew 18.7% YoY to Rs 509 crore, mainly due to a significant decline in tax outgo.

Outlook

We continue to believe in Pfizer’s strong growth track record in power brands and capability in new launches on a fairly consistent basis (recent launches from parent’s staple- Zavicefta (anti-infective), Eliquis (CVS), Xeljanz (pain management). We maintain BUY and arrive at a target price of Rs 4740 based on 40x FY22 EPS of Rs 118.6.

Pfizer 19072020-icici

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