This morning Cramer on TheStreet.com posted his comments regarding Pfizer’s (PFE) drug blow-up this weekend. You’ll need to go visit thestreet.com there about what he said exactly, but keep in mind he has been a Pfizer bear for a long time.
He had been questioning their ultimate pipeline for a long time, and interestingly enough he noted it could be in Bristol-Myers (BMY) mode. If he is right, that is not a good prognosis for a DJIA component.
It is worth noting that Cramer has been very cautious on PFE since September. PFE really boondoggled this. This was just touted by the company at its analyst day last Thursday, yet the bomb was dropped on Saturday. How does a company go on record with so much, and then make this announcement.
PFE is becoming a case study on how to lose the trust of Wall Street, and this is going to plague the company for much longer than just today. That is why so many analysts have downgraded the company, and this is not even taking the boutique calls into consideration:
cut to Neutral at Merrill Lynch,
cut to Neutral at JPMorgan,
cut to Equal Weight at Morgan Stanley,
cut to Underweight at Lehman.
Now you just have to wonder how long it will be in the doldrums before "value players" start coming in, but don’t count on it being today. My guess is that you may see a small bit of recovery after the dust settles from the gap down, but these drug pipeline blow-ups are usually not isolated to a day and historically drug stocks with a severe drug issue tend to go even lower than the initial gap down price. That means that daytraders can play the stock up and down today, but longer-term buyers will probably do better giving this some time before entering long-term positions.
As of November, there were 44.7+ million shares in PFE’s short interest, up from 44.1 million shares in October. This was THE great drug in their pipeline, and now you have to wonder how good their grasp on the reality of their other drug studies happens to be.
Jon C. Ogg
December 4, 2006