Pfizer (PFE, Financial) shares fell by 2.82% as the stock price dropped to $29.34 following revelations that activist investor Starboard Value has taken a small stake in the company.
Starboard Value released a public letter to Pfizer's board, announcing a scheduled meeting with CEO Albert Bourla to discuss possible strategic changes at Pfizer. The firm raised concerns about potentially troubling conduct by Pfizer's management towards former executives Ian Read and Frank D'Amelio during its due diligence process. Allegedly, Pfizer threatened litigation and sought to reclaim previous compensation from these executives, unless they publicly supported CEO Bourla.
Starboard has described these actions as a potential breach of fiduciary duty and urged Pfizer's board to conduct an internal investigation. Pfizer has yet to respond to these allegations, and the meeting with Starboard is set for next Wednesday.
From a financial perspective, Pfizer's current valuation metrics suggest caution. With a market capitalization of $166.26 billion and a GF Value of 27.81, the stock is considered fairly valued. For more detailed valuation metrics, including forward-looking estimates, visit the GF Value page.
Pfizer's financial health shows certain areas of concern, with a notably distressing Altman Z-score of 1.76, indicating a possible risk of bankruptcy within the next two years. The company's earnings potential is also a point of focus, with an earnings growth rate that has fluctuated over the years, currently standing at 20.4% over a five-year period.
Additionally, Pfizer's profitability ratios have shown a decline, with operating margins decreasing at an average rate of 7.6% per year over the past five years. The stock's dividend payout ratio appears unsustainable at 1.23, and insider selling has been recorded, with 5,154 shares sold over the past three months without corresponding insider purchases.
In summary, while Pfizer (PFE, Financial) has been a stalwart in the pharmaceutical industry, current market challenges and internal issues as highlighted by Starboard Value, combined with financial metrics pointing to caution, suggest investors should watch developments closely as they unfold.
