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Last Updated : Dec 02, 2013 03:17 PM IST | Source: Moneycontrol.com

Buy Pfizer; target Rs 1720: Firstcall Research

Brokerage house Firstcall Research is bullish on Pfizer and has recommended buy rating on the stock with a target price of Rs 1720 in its November 26, 2013 research report.

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Firstcall Research report on Pfizer

"Pfizer's stock touched a new high of Rs.1648 on 25th November on the back of strong September quarter results, dividend payout of Rs. 360 per share and the long awaited merger announcement with Wyeth Ltd. Net Profit and net sales of the company rose in double digits in the current September quarter. Net sales grew by 11.3 percent at Rs. 2989.70 mn against Rs. 2686.40 mn in Q2 FY13. Net Profit zoomed by 33 percent from Rs. 522.80 mn to Rs. 695.90 mn in Q2 FY14. EBDITA also rose on the same lines by 35.22 percent at Rs. 1089.60 mn. Rise of other Income at 53 percent also contributed in raising net profit for the current quarter."

"Over the previous June quarter, net profit increased by 46 percent which is commendable in the present high inflation slow growth scenario. Pfizer Ltd has improved EBDITA and net profit margins by 644 and 381 basis points in Q2 FY14. This has been achieved by tightening the cost structure of the company. Over all expenditure of Pfizer has risen by 6.4 percent YOY and by just 1.4 percent QOQ. Pfizer imports a major part of its raw material, thus stable foreign exchange rate plays very important role in its cost structure. The company also stands debt free with no long term and short borrowings."

"Merger with Wyeth is expected to yield operational synergies, financial strength, long term value for shareholders and most important de-risking Pfizer's business profile as it will now include segments such as women's health, vaccines, respiratory, CNS etc. Combined sales and net profit of Pfizer and Wyeth in September quarter are Rs. 4703.40 mn and Rs. 879.70 mn respectively. In highly fragmented and competitive Indian pharma industry, Pfizer Wyeth merger is a win- win situation not only for the shareholders of both the companies but also for long term investors. We recommend 'BUY' for the scrip with a target price of 1720 for the medium and long term," says Firstcall Research Report.

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First Published on Dec 2, 2013 03:17 pm