Barclays downgrades Pfizer on April 5
On April 5, 2018, Barclays (BCS) updated its recommendations for some leading US pharmaceutical companies. It downgraded its recommendation for Pfizer (PFE) from “overweight” to “equal weight,” and Barclays analyst Geoff Meacham cut his price target on Pfizer stock from $41 to $38. That day, Pfizer stock fell ~1.3% following the announcement of the rating downgrade.
In the same report, Meacham also downgraded his rating on Biogen (BIIB). However, he upgraded his stock recommendation on Merck while increasing his target price on the stock, as discussed in the previous article in this series.
Analyst’s rationale for the downgrade
Meacham based his previous “overweight” rating on Pfizer’s speculative acquisition of Bristol-Myers Squibb (BMY) and AstraZeneca (AZN). According to CNBC, Barclays stated that this acquisition would be “transformative.” However, the analyst noted that these deals seem less likely now. Moreover, according to Barclays estimates, Pfizer stock’s current price levels may have already accounted for potential upside for key products such as Ibrance, Prevnar, Xtandi, and Xeljanz.
Wall Street analysts’ recommendations on PFE stock
Of the 22 analysts covering PFE stock on April 10, 11 (~50%) recommended “buy” or “strong buy,” nine (~41%) recommended “hold,” and two (~9%) recommended “strong sell.” Analysts’ average 12-month target price for PFE stock is $40.11, which implies an ~11.7% return over the next 12 months based on the stock’s closing price of $35.46 on April 9.
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