Pfizer's (PFE) Shares Drop on Rating Downgrade by JP Morgan

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Pfizer Inc. PFE shares fell almost 0.9% on Dec 11 after JPMorgan Chase & Co. JPM downgrading its rating on the company to "neutral", as reported in a CNBC article .

JP Morgan downgraded Pfizer as it expects share price growth of the latter to decelerate following a 22% rise so far this year. The rating company states that although Pfizer is focused on re-accelerating growth of its top and bottom line beyond 2020, it is trading on par with its peers, suggesting that the growth factor has already been factored in the price. Any further momentum in stock price is likely to be fueled by "additional pipeline success or positive new launch momentum", largely expected beyond 2020. Thus, JP Morgan has assumed a wait and see policy for the company.

Pfizer's stock has increased 21.5% so far this year compared with the industry 's gain of 7.4%.

We remind investors that the company's top line is being impacted by loss of exclusivity of several drugs including Celebrex, Lipitor and Norvasc among others. Pfizer is also set to lose patent cover for several other drugs over the next few years, which includes Lyrica and Chantix. Moreover, Pristiq and Viagra lost patent exclusivity in 2017 and are facing generic competition.

Meanwhile, other pharma companies are looking to get approval for generic version of the company's key products Xtandi and Xeljanz. In fact, loss of exclusivities hurt 2017 sales by $2.1 billion and is expected to hurt revenues by about $2 billion in each of the next three years (through 2020).

However, Pfizer is committed to bring newer drugs in the market and is investing heavily in its pipeline, which includes treatment for oncology, metabolic disease and cardiovascular risks, rare diseases, immunology, inflammation and vaccines as well as immuno-oncology. The company expects to gain approval for approximately 25 to 30 drugs by 2022, which includes about 15 products with blockbuster potential. Successful development of its pipeline is likely to offset the impact of generic competition though it will take a few years to happen.

Pfizer also has several licensing deals and collaborative agreements related to development of its pipeline. These include deals with Merck MRK for diabetes medicine, Bristol-Myers BMY for blood thinner drug, Eliquis, and Novartis for non-alcoholic steatohepatitis ("NASH").

Pfizer Inc. Price

Pfizer Inc. Price | Pfizer Inc. Quote

Zacks Rank

Pfizer currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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