Why Pfizer Will Move the Dow Monday

On Friday, the Dow Jones Industrials (DJINDICES: ^DJI  ) started out the day in record territory, with a big surge in April employment creating positive economic momentum for the stock market. But news that Russian President Vladimir Putin had called for a meeting of the U.N. Security Council took the steam out of the Dow, and by the end of the day the average had fallen 46 points for its second-straight decline. Still, next week will feature earnings news from Pfizer (NYSE: PFE  ) , and investors will look to see if the pharma giant will offer a different reading on the health-care space than other pharmaceutical companies in the Dow that reported last month.

Pfizer will report its results before the market opens Monday morning. While the company didn't specify a specific time, investors expect to see results at around 7 a.m. EDT based on previous quarterly releases. Pfizer has scheduled its earnings conference call for 10 a.m. EDT, and its comments could move the stock and the Dow Jones Industrials.

Pfizer presents an interesting case for investors this quarter, because it's going through the major distraction of a merger attempt. From the standpoint of pure financial performance, the company has struggled to rebound after losing revenue from its blockbuster Lipitor drug to generic competition. Investors expect a modest climb in earnings but continued weakness in revenue, as Pfizer tries to build up sales of other budding blockbuster drugs and develop its pipeline of experimental-stage treatments.

Yet Pfizer has a deal on the table to spend more than $100 billion on a merger that would bolster its leadership position in the global pharmaceutical industry. Pfizer's target has been reluctant to agree to a merger, and even after raising its bid slightly, Pfizer was once again rebuffed on Friday. But the company believes the potential for cost-saving synergies and pipeline coordination might well be worth the effort to persuade its target to accept its advances.

In many ways, what happens with Pfizer earnings is probably less important from the perspective of influencing the Dow Jones Industrials than what happens with its merger attempt. If it can consummate a deal, Pfizer could prove that even mammoth mergers and acquisitions are still fair game, and that in turn could get investors more excited about large-cap stocks in a variety of industries with benefits to be gained from consolidation.

Invest in the next wave of health-care innovation
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And the technology behind is poised to set off one of the most remarkable health care revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology's true potential, and its ability to make life-changing medical solutions never thought possible. To learn how you can invest in this unbelievable new technology, click here now to see our free report.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2941715, ~/Articles/ArticleHandler.aspx, 10/20/2014 9:23:22 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement