Recent successes should help Pfizer get back on track
Pfizer (NYSE: PFE) has had a rough start to 2009. Investors have been less than enthusiastic about its $68 billion acquisition of Wyeth and concurrent dividend cut.
But the drug giant recently ended a clinical trial early because its cancer drug Sutent was able to stop the progression of a rare form of pancreatic cancer better than a placebo. When it becomes clear that a drug works, independent data monitoring boards stop trials early so that patients getting the placebo can be transferred to the drug. That’s great news for patients and for Pfizer.
Sutent is approved to treat kidney cancer and a digestive-tract cancer. It rang up sales of $847 million last year, up 46 percent year over year. But most of that increase came from outside the United States. Sales were up just 7 percent in the U.S., as the drug has a lot of competition. The new application should boost sales modestly, given the relatively small number of pancreatic cancer patients. Beyond that, the results are encouraging, suggesting that Sutent might be useful in treating other cancers – breast, lung, colon, prostate and liver.
Pfizer just needs a few more good results like this, and to integrate Wyeth effectively, and it can get back to growing again. (Pfizer is a Motley Fool Inside Value recommendation and the Fool owns shares of it.)
Ask the Fool
Q: What’s an annual report good for? Does it give intrinsic and market values for a stock? – M.S., Adrian, Mich.
A: Annual reports can serve investors well. If you’re a novice, read the CEO’s letter to shareholders, which gives a sense of what direction the company is headed in, as well as how candid the CEO is. Even the intimidating financial statements are informative, if you give them a chance. (And they’re often not as complicated as you think.) The balance sheet will show you the firm’s financial health, including its cash, money it owes, money owed it, etc. The income statement (sometimes called the statement of operations) shows sales, costs and profits over a period of time, while the statement of cash flows will list all of the company’s cash inflows and outflows during the period. Learn how to make more sense of financial statements and your portfolio may thank you.
Annual reports don’t focus on companies’ valuations, but you can look up a company’s current market value easily via online stock quotes. Just click over to http://finance.yahoo.com, for example, type in a company’s name or ticker symbol and look for “market capitalization” (or “market cap”). You can also calculate it yourself by multiplying the current stock price by the number of shares outstanding. A company’s intrinsic, or fair, value is a more elusive beast. Different analysts will come up with different numbers, using different assumptions about the firm’s growth prospects, among other things.
Q: If I donate $100 to charity and my company matches that donation with another $100, can I claim a $200 deduction in my tax return? – R.T., Statesboro, Ga.
A: Sorry. You may deduct only the $100 that you contributed.
My dumbest investment
My dad’s broker just tried to talk me into buying Citigroup for him. Gads, what a mess. He also gets $350 a trade. Little does he know that next month the account is being transferred to USAA’s brokerage for much lower trading commissions. It’s a bummer when the only one who wins is the broker. – C.S., online
The Fool responds: On the day you shared this story, Citigroup closed at $3.82, down from $7.15 the week before. It might have looked like a bargain, and many might have had trouble imagining it falling further, but it did just that, dipping as low as $1.02, before rebounding to $2.62 recently. Sure, once Wall Street and our economy stabilize more, Citigroup might regain its footing and may turn out to be a great long-term holding. But right now, surely you can find more compelling stocks, perhaps among healthier blue chips. Good for you for switching away from $350 commissions, too. Plenty of great brokerages will serve you just as well for much less. Learn about other brokerages, some with commissions of $7 or less, at www.broker.fool.com.