Starboard Takes a Billion Dollar Stake in Pfizer
Pfizer shares have seen a rise in premarket trading in New York, following a Wall Street Journal report that activist investor Starboard Value has invested $1 billion in the pharmaceutical company. Pfizer's stocks saw a significant rise during the pandemic due to the sales of its Covid vaccine. However, with the pandemic now over and no imminent biothreat, the shares have plummeted to their 2020 lows.
Starboard's Turnaround Plan
According to the Wall Street Journal, citing anonymous sources, Starboard has invested a billion dollars in Pfizer and has approached two former Pfizer executives, Ian Read and Frank D'Amelio, to help implement a new turnaround plan. The specifics of Starboard's plans or its interactions with the company have not been disclosed.
When asked for a comment, a Pfizer spokesperson told MarketWatch, "We do not comment on market speculation or rumor." Starboard did not respond to MarketWatch's comments during the overnight hours. The Wall Street Journal report was published on Sunday evening.
Pfizer's Struggles
Pfizer has been attempting to convince investors that its other drugs can compensate for the decrease in Covid vaccine and pill revenue. This has resulted in a more than 50% drop in shares in just a few years. However, shares are up more than 3% in premarket trading.
MarketWatch noted, "Pfizer easily beat second-quarter earnings estimates in July, raising its yearly revenue and profit outlook, and in August launched a direct-to-consumer platform for patients. But the pharma giant took a blow last month when it pulled a sickle-cell treatment from the market over a possible link to deaths."
In July, Pfizer also released positive data from its once-daily anti-obesity pill, 'danuglipron,' as it attempts to expand its product pipeline. The company has also been investing heavily in its cancer drugs.
Pressure on Pfizer's CEO
CEO Albert Bourla has been under significant pressure to turn things around after overestimating the future demand for Covid-related products. Shares are currently trading below the 2019 levels when he became CEO.
The silver lining is that only a small number of Americans opted for their 12th Pfizer Covid booster shot after seeing numerous news reports and even some experiencing firsthand accounts of friends and family members who experienced adverse reactions to the shots. Bourla is now facing the harsh reality of selling products that the government and corporations can no longer mandate for use.
Bottom Line
The recent investment by Starboard Value in Pfizer signals a potential turnaround for the pharmaceutical giant. The company's struggles during the post-pandemic period have been evident, and it will be interesting to see how this new investment and turnaround plan will affect its future. What are your thoughts on this development? Feel free to share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is available every day at 6 pm.
