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December 17, 2004

Pfizer Gets a Headache

Someone please pass the Tylenol.

Pfizer pfizzled today on news that its subscription pain medication, Celebrex, increases a chances of experiencing a heart attack. This whole story is bogus, and I’ll tell you why.

There actually were two contradictory studies released today. The one that correlated Celebrex to increased heart risk was based on an 800mg per day dose while the one that found no correlation used a 400mg dose. What was not noted in these reports is that Pfizer’s maximum recommended daily dosage is 400mg per day, and most patients are prescribed 100mg or 200mg per day. Would someone please tell me the name of a pain killer that doesn’t liquify some portion of your internal workings when taken at twice the maximum dosage for extended periods of time? Even an OTC drug like Tylenol will scar your liver if taken at that dosage for a relatively short period of time.

On second thought, hold the Tylenol and pass the Pfizer stock certificates.

A phenomenal trading opportunity is presenting itself in PFE. Both long and short-term holders will probably like this one. Usually, when the scare of a bogus story blows over, a stock will see a full recovery in price, providing short-timers with a quick buck. Also, with today’s drop and a recent dividend increase, PFE is now yielding over 3%, giving long-timers a nice cash flow while they wait for things to pan out.

Granted, the public scare that has been generated by today’s news will immediately hurt Celebrex sales, but ultimately, people’s dislike for pain and the lack of competitive alternatives will bring them back.

As always, timing an entry point is the trick. Since we are near the end of the year, a few timid money mangers (I say a few, but most of them are timid) will probably try to dump the stock so as not to show large PFE positions in the annual report. So we may see another day or two of slow, grinding selling pressure. However, once this abates, we should see a nice pop. Use careful judgment here. These types of trades are not for everyone.

Author’s disclosure: No positions in PFE

 

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