Shares of Pfizer PFE rose nearly 3% on Monday following a report issued by Bloomberg, which stated that activist investor Starboard did not nominate any director to Pfizer’s board ahead of Jan. 25.
With the expiry of the deadline, Starboard has foregone an opportunity to bring changes in PFE’s board. This signals a less confrontational approach, at least for this year. Shareholders are set to convene at Pfizer’s annual meeting in April to vote on director seats for the year.
The article, however, pointed out that Starboard could still try to make the changes in Pfizer’s board next year if the two parties are unable to reach an agreement.
Bloomberg claims to have contacted both Pfizer and Starboard, who have either declined to comment on the above news or are yet to respond.
The above article provides some respite to Pfizer’s management, which was accused last year by Starboard of making poor capital allocation, research and development (R&D) failures and problems with forecasting and budgeting. Before making these claims, Starboard built a $1 billion position in PFE.
PFE Stock Performance
In the past year, shares of Pfizer have lost 2.3% against the industry’s 0.2% growth.
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Starboard Slams PFE for R&D Inefficiencies, Overpaid Acquisitions
At an investor summit in October, Starboard publicly detailed its concerns about the pharma giant and called out PFE’s board of directors to take action against the latter’s management for not earning sustainable revenues on R&D and M&A.
Starboard painted a grim picture of the pharma giant, highlighting numerous clinical setbacks and product launches that fell short of commercial expectations. It also criticized Pfizer's efforts with its GLP-1 agonist obesity program, citing Wall Street analysts’ skepticism about the latter’s once-daily formulation of oral GLP-1 drug danuglipron.
The activist investor also highlighted Pfizer’s investment of about $70 billion since the pandemic in a string of acquisitions, namely Seagen, Biohaven, Arena Pharmaceuticals, Global Blood Therapeutics and ReViral. Per the investor, the company overpaid for these acquisitions, citing PFE’s own target of generating more than $20.5 billion in sales from products acquired from these deals by 2030.
Per Starboard, the above decisions have resulted in Pfizer losing nearly $20-$60 billions of market value since 2019, despite receiving a $40 billion boost from its COVID-19 franchise during the pandemic. It attributed this market value decline to a lack of internal innovation and failure to deliver on its commitments.
Starboard focused on the need for capital allocation as an important discipline for the pharma giant and has requested the board to hold management accountable for the company’s incorrect capital allocation.
PFE’s Zacks Rank
Pfizer currently carries a Zacks Rank #3 (Hold).
Pfizer Inc. Price
Pfizer Inc. price | Pfizer Inc. Quote
Key Picks Among Biotech Stocks
Some better-ranked stocks from the sector are Castle Biosciences CSTL, CytomX Therapeutics CTMX and Erasca ERAS. While CSTL sports a Zacks Rank #1 (Strong Buy) at present, CTMX and ERAS carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bottom-line estimates for Castle Biosciences have improved from a loss of 59 cents per share to earnings of 39 cents for 2024 in the past 90 days. During the same timeframe, loss per share estimates for 2025 have narrowed from $2.15 to $1.70. In the past year, shares of Castle Biosciences have risen nearly 8%.
CSTL’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 172.72%.
In the past 90 days, estimates for CytomX Therapeutics’ 2024 loss per share have narrowed from 29 cents to 5 cents. Estimates for 2025 loss per share have narrowed from 56 cents to 35 cents during the same timeframe. CTMX’s shares have lost 46% in the past year.
CytomX’s earnings beat estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 115.70%.
In the past 60 days, estimates for Erasca’s 2024 loss per share have improved from 91 cents to 73 cents. Estimates for 2025 loss per share have narrowed from 84 cents to 61 cents during the same timeframe. In the past year, Erasca’s shares have risen nearly 7%.
ERAS’ earnings beat estimates in two of the trailing four quarters and missed the mark on the other two occasions, delivering an average negative surprise of 7.04%.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Pfizer Inc. (PFE) : Free Stock Analysis Report
CytomX Therapeutics, Inc. (CTMX) : Free Stock Analysis Report
Castle Biosciences, Inc. (CSTL) : Free Stock Analysis Report
Erasca, Inc. (ERAS) : Free Stock Analysis Report
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