My 'Fallen Angels' Favorites For 2020 Part 3: Pfizer

Read Part 1: My 'Fallen Angels' Favorites For 2020 Part 1: IBM
Read Part 2: My 'Fallen Angels' Favorites For 2020 Part 2: Kraft Heinz
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Fallen Angel #3: Pfizer (PFE)

Pfizer has been left behind by many of its competitors - at least in the stock market. Of my 3 fallen angels, I or my clients own the first two. We own no PFE yet. Instead, in our portfolio, we hold both AbbVie (ABBV) and Bristol-Myers Squibb (BMY). Both have done very well for us this year. I plan to buy PFE because I think 2020 will be the year Pfizer shares rebound as these two have.

Shares were actually doing just fine in the market all the way through mid-year. Then, from July to September, the entire 3rd quarter, it plunged 20% in an up market! It has recovered somewhat but is still down for the year.

(Source: Fidelity.com)

The catalyst for the sudden fall was Pfizer’s announcement that the company was going to spin off its generic drug unit, Upjohn, to shareholders. Upjohn sells a number of now off-patent Pfizer drugs like Viagra, which still have good markets globally.

The second shoe to drop during that announcement was that Pfizer was planning to merge Upjohn with generic marketer Mylan NV (MYL), now headquartered in the UK, to create a new company to be called Viatris. (Where *do* they come up with these corporate names? Maybe it is supposed to be redolent of Viagra, one of its big sellers. To me, it is reminiscent of Vitalis instead, which provides a whole messier image...)

Following closely on the heels of a previous Pfizer announcement of a joint venture with GlaxoSmithKline (GSK) to operate its consumer division (just finalized in August), the investment and analyst community wondered if Pfizer was just drifting, wasting energy on corporate organization charts at the expense of spending its energy on research & development, or maybe just rearranging the deck chairs on the Titanic.

It is also a risk factor that in 2026, PFE will lose begin to lose patent protection for as many as five of its blockbuster drugs. But then, that happens all the time with quality ethical pharmaceutical companies.

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Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PFE over the next 72 hours

Disclaimer: I do not know your personal financial situation, so this is not ...

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