17:01 ET Warner Lambert/DLJ -2: Recommends Switching Out Of Pfizer
By Melanie Trottman
NEW YORK (Dow Jones)--Shares of pharmaceutical giant Warner-Lambert Co. (WLA)
shot up to a new 52-week high Monday after Donaldson Lufkin analyst Kent Blair
issued a bullish report on the company.
Shares of the Morris Plains, N.J., company reached a new 52-week high of 70
1/2, displacing the previous record of 68 1/8 set on May 26.
Several analysts cited the DLJ report as a reason for the stock increase.
Also cited was the release of the weekly prescription numbers by healthcare
auditor IMS America, which showed Warner Lambert's Lipitor and Rezulin drugs
continue to gain ground in their markets.
In his research note, Blair recommended that investors switch out of
prescription drug manufacturer giant Pfizer Inc. (PFE) - cited as "the highest
multiple pharmaceutical stock" - and into Warner Lambert. "We have a high
degree of conviction that WLA will meet the numbers, whereas longer term sales
of Viagra are expected to fall far short of the bull's expectations," the
report said.
Shares of Warner-Lambert are trading at 69 15/16, up 3, or 4.5%, on volume of
3.2 million shares. Average daily volume is 2.8 million shares.
Pfizer's stock is trading down 3 1/16 Monday, or 2.7%, at 108 7/8. Volume has
reached 4.7 million shares, compared with a daily average of 5.3 million.
(MORE) DOW JONES NEWS 06-29-98
03:32 PM
ABN Amro analyst Mario Corso said Rezulin's increased market share data
released Monday for the week ended June 19 probably lifts investor concern
about the drug that developed in early June.
At that time, the company said a federal study trying to determine if
diabetes drug Rezulin could be used to prevent the onset of diabetes was
discontinued after a patient taking the drug died. The company said the death
was caused by complications unrelated to the study of the medication.
The incident was thought to have renewed concerns about Rezulin's impact on
the liver. One analyst said that the removal of Rezulin from the National
Institute of Health study could cause a short-term drop in prescriptions of the
drug.
According to a company spokesman, Rezulin's share of new prescriptions in the
oral diabetes market increased to 10.9% for the week ended June 19, from 10.6%
the previous week. The number was about 9.5% two months ago, Corso said. That
was a dropoff from a high of 12% in November where it stood before the drug was
relabeled to emphasize the need for more diligent liver function tests, Blair
said in his report. Now, Rezulin's market share "continues to claw its way back
up toward the November '97 high," the report said.
Warner Lambert's cholesterol-lowering drug Lipitor also gained new
prescription market share for the week ended June 19. Lipitor's share in the
statin market was 38.3%, up from 38.1% a week earlier, a company spokesman
said. About two months ago, the number was about 36%, Corso said.
Blair expects second-quarter sales at Warner Lambert to be up about 25%,
paced by what he called an "almost doubling" in the U.S. pharmaceutical
business, where Lipitor and Rezulin "remain tremendously strong." Foreign
pharmaceutical revenues are forecast to have expanded 25% to 30%, according to
the report.
Blair noted that Warner Lambert's stock has performed well in the second
quarter, rising 18%, compared with the 3% increase in the S&P 500 index.
Year-to-date, the company is up 62%, the report said, "significantly more" than
the market's 17% gain. "Although WLA is selling at 48 times estimated '98 EPS
and 37 times projected '99 EPS, we continue to recommend that investors switch
out of PFE" and into Warner Lambert, the report said.
Blair estimates Warner Lambert will earn $1.40 a share in 1998 and $1.82 a
share in 1999. Blair, who rates the company a buy, has a 12-month price target
of 80.
Corso's 6-to-12-month price target is 78.
Shares of Warner Lambert settled a bit from the day's high, closing at 69
3/16, up 2 1/4, or 3.4%.
Pfizer finished at 109 3/4, down 2 3/16 or 2.0%.
-Melanie Trottman; 201-938-5099
(END) DOW JONES NEWS 06-29-98
05:01 PM |
