DuPont's Gains Push the Dow's Week-Ending Climb

Pfizer falls to the bottom of the Dow as investors move on from the company's failed attempts to lure AstraZeneca.

May 23, 2014 at 6:00PM
Daily Fool

Investors welcomed a strong close-out to the week today, as the Dow Jones Industrial Average (DJINDICES:^DJI) finished the day up 63 points, or nearly 0.4%. Most blue-chip members of the index ended up in the green, with DuPont (NYSE:DD) among today's better gainers as the stock jumped 0.9%. Meanwhile, Pfizer (NYSE:PFE) fell to the bottom of the Dow today, with the big pharma stock dropping 0.6% in the wake of its failed attempt to acquire AstraZeneca. Let's catch up on what you need to know.

Will Pfizer follow up its AstraZeneca failure with a new buyout push?
Pfizer's attempts at luring AstraZeneca into a merger seem all but dead now, but don't expect this pharmaceutical giant to stand pat going forward. The company's pipeline boasts 27 phase 3 or later programs as of its most recent update in late February. Pfizer, however, is facing a lack of many high-potential blockbusters in that pipeline, with the exception of highly touted breast cancer therapy palbociclib, which analysts have estimated at peak sales of up to $4 billion or more.

Given that Pfizer has tens of billions of dollars in overseas untaxed profits, however, it wouldn't be surprising to see Pfizer make a move to beef up its product portfolio and pipeline with a major acquisition in the near future -- even if it isn't on the same scale as a merger with AstraZeneca. Given this company's struggles to reverse recent sales declines, investors should expect more action to come on Pfizer's front.

DuPont made the most of the Dow's day, unlike Pfizer, and investors are looking forward to the company's final decision regarding its lackluster performance chemicals division. While DuPont's committed to spinning off this unit -- a move that company leadership indicated currently is on track -- this firm's also looking at other options, including a potential sale of the business. The performance chemicals unit hasn't exactly been a growth segment for DuPont: It saw sales decline by 3% year over year in the company's most-recent quarter. With industrial chemical demand and pricing volatile, DuPont is angling to divest the business in order to reinforce stability in its future earnings. While investors might miss a unit that was DuPont's third-largest by sales in its most-recent quarter, the company's long-term growth prospects in its agricultural group -- by far its largest by revenue -- should keep this firm and stock headed in the right direction for years to come.


Source: Wikimedia Commons

Outside of the Dow today, GameStop (NYSE:GME) stock jumped 4.2% after the company reported earnings. The video game retailer missed analyst expecations on its top line, but a 7% overall rise in revenue, boosted by the ongoing success of Microsoft's and Sony's new Xbox One and PlayStation 4 consoles, delighted investors today, and powered up a stock that's slipped by more than 25% since the start of 2014. While new game software sales fell sharply by more than 20% for the quarter, title releases for the newest generation of consoles have been limited since the Xbox One and PS4 launched late last year. With a lineup of highly touted game titles set to release in the near future -- including Ubisoft's Watch Dogs next week, a game GameStop said had broken records as the most pre-ordered video game in the young life of the newest consoles -- this retailer will have a chance to keep up its momentum.

In the long run, however, it's wise to exercise caution with GameStop. With digital sales gaining acceptance around the video game industry, this company will need to keep adapting to complement its brick-and-mortar physical sales in order to satisfy investors.

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Dan Carroll has no position in any stocks mentioned. The Motley Fool owns shares of GameStop and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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