Pharmaceutical giant Pfizer sees stock surge as activist investor takes $1 billion stake
Pfizer’s stock price experienced a significant boost on Monday, rising over 4% after reports emerged that activist investor Starboard Value had acquired a $1 billion stake in the company. The move is seen as an effort to revitalize Pfizer’s lackluster performance in recent years.
Despite its windfall from COVID-19 vaccine sales, Pfizer’s stock has remained stagnant, with investors focusing on the company’s underwhelming product portfolio and looming patent expirations. The company’s revenue has also declined since the pandemic ended.
CEO Albert Bourla has attempted to shift the narrative, highlighting Pfizer’s aggressive strategy, including a $43 billion deal with Seagen and the launch of 12 new products in the second half of 2023. However, investors have remained unimpressed, with the stock trading within a narrow range over the past year.
Bourla has expressed optimism about the company’s growth potential, but his efforts have yet to resonate with investors. In 2021, then-CFO Frank D’Amelio, who has reportedly been tapped as a consultant by Starboard, predicted that investors would eventually warm up to Pfizer’s story. However, that has not happened.
Pfizer’s struggles to convince Wall Street of its value date back to 2019, when Bourla took the helm. At the time, the company was pivoting away from its consumer healthcare business and spinning off its generics business. Bourla committed to showcasing Pfizer’s ability to operate as a lean and efficient machine, but the company’s progress has been slow to materialize.
Fast-forward to 2024, and Pfizer has made good on some of its promises, including investing in growth and returning capital to investors. However, the company’s deals, including the Seagen acquisition, have not moved the needle for Wall Street.
Analysts believe that Starboard’s stake in Pfizer is likely driven by the company’s lack of return on its aggressive business development strategy. The investor’s involvement may bring about much-needed change, but it will not be an easy task. Leerink Partners analysts predict that Pfizer’s revenue growth will remain constrained for the next five years, with no clear opportunities to boost shareholder value.
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