Pfizer's Missed Megadeal Sparks the Dow's Rise

Pfizer may have struck out in its bid to buy AstraZeneca, but the Big Pharma stock's 2% jump leads a good day for the market.

Dan Carroll
Dan Carroll
Apr 21, 2014 at 2:30PM

The market opened the week on an upbeat note, with the major stock indices all modestly on the upswing. The Dow Jones Industrial Average (DJINDICES:^DJI) was up more than 45 points as of 2:35 p.m. EDT. Big Pharma's Pfizer (NYSE:PFE) has led the Dow's gain so far today, with the stock climbing 2% on reports of talks of a pharmaceutical megadeal with rival drugmaker AstraZeneca (NYSE:AZN). Earnings season pushes on across the market, and outside of the Dow, Halliburton (NYSE:HAL) has jumped 3.1% to rank among the top large-cap stocks on the day. Let's catch up on what you need to know.

Pfizer's drive for a deal
Pfizer's talks with AstraZeneca about a mammoth merger have been the talk of the health-care sector today, even as talks never moved beyond informal discussions, according to the U.K.'s Sunday Times. Pfizer is in the hunt to bolster its drug pipeline and buoy revenue growth after the patent expiration of former top-selling cholesterol drug Lipitor. The rumored bid of about $100 billion for AstraZeneca would be predicated partly on the strength of the British company's cancer drug pipeline. However, Pfizer's rival turned down the offer and will press forward with its own effort to stave off upcoming patent expirations as it searches for revenue growth.

AstraZeneca's stock was up 8.7% so far on the day, but could such a merger help these two pharma giants? AstraZeneca is on course to lose patent protection on two of its top-selling drugs, Nexium and Crestor, in coming years, with the former to face its day of reckoning in 2014. The company has made several acquisitions of its own recently to keep its pipeline stocked, but AstraZeneca's leadership still sees falling revenue ahead. Pfizer, meanwhile, has managed to bounce back from Lipitor's loss behind other rising drugs, but the company's pipeline, while boasting 26 drug programs in phase 3 trials or later as of early November, lacks many candidates viewed as potential star treatments. According to Bloomberg, Pfizer holds about $69 billion worth of untaxed cash outside of the U.S., so don't expect the company to be done searching for big deals to provide a shake-up for eager investors.

Around the Dow today, Disney (NYSE:DIS) has fallen to the bottom of the blue-chip index, losing 1%. Disney's stock has thrived lately, picking up 29% over the past year, so with little news out from the company it's likely that investors have taken profits from shares' rise. However, don't be swayed by the run-up: Disney looks like a long-term blue-chip winner. The company's sales across its business divisions, particularly its media networks group, its largest by revenue, have performed very well as of late. Box-office revenue continues to soar, with animated feature Frozen becoming the largest international animated hit of all time this past weekend by taking in nearly $730 million abroad. Disney's stock might be falling today, but this winner shouldn't be down for the long term.

Meanwhile, Halliburton is making waves today for its own better than expected quarterly earnings results. The oil-field services company reported a modest climb in year-over-year revenue to $7.3 billion for its most recent quarter. That, along with its $0.73 per-share earnings result, topped analyst expectations. Halliburton projects that its North American margins should rebound as prices rise in the near future. The company has made a successful international push as well, with 13% revenue growth in its Middle East and Asia segment in its most recent quarter. Increased drilling both at home and abroad bodes well for this energy supplier, and while Halliburton's steep 21% stock run-up year to date looks like a lot, this company's in prime position to capitalize on the ongoing shale boom.