Gladiator Stocks - Pfizer - ICICI Securities

Strategy

Buy Pfizer in the range of Rs. 4650.00-4740.00 for target price of Rs. 5450.00 with a stop loss of Rs. 4340.00. Time Frame: Six months

Technical View

- The MNC Pharma stocks continue to remain in strong up trend and are resuming fresh up move after last three months breather, auguring well for the next leg of up move

- The share price of Pfizer has formed a strong base at the 52 weeks EMA and the lower band of the rising channel containing price activity since August 2019. The sharp up move in the last one month post the base formation highlights strength and offers fresh entry opportunity with a favourable risk reward set up

- The stock remain in strong uptrend, in case of any temporary breather, we expect demand to emerge around Rs. 4350 levels as it is the confluence of the lower band of the rising channel (currently at 4350) and 61.8% retracement of current up move (Rs. 3955-4918)

- We expect the stock to continue with its current momentum and head towards Rs. 5450 levels as it is the 123.6% external retracement of the previous major correction (Rs. 5170-3955) placed at Rs. 5450 levels.

Fundamental View

- Pharma MNCs with domestic focus continue to drive investor's interest on the back of: 1) consistency in stable growth despite higher competition and regulatory changes, 2) strong focus on legacy power brands as well as introduction from global parent's staple, 3) consistent free cash-flow generation, 4) debt-free balance sheet, strong core RoEs and 5) healthy dividend payout track record

- Pfizer India is a net debt-free company with healthy core RoE of ~31% in FY20. Strong brand recall, consistent new product launches and acquisition of new brands, volume growth in top brands and intermittent price hikes provide comfort on the financials front. The company had declared Rs. 330 (Rs. 320: special, Rs. 10: final) dividend for FY20. Additionally, it has maintained a dividend payout of 25-30% during FY16-19

- Pfizer is following a measured approach with de-focusing and hiving off of tail brands and focusing on core strengths areas such as vaccines, pain management, vitamins, GI and CVS. The vaccines segment especially remains at the core of future growth and new launches. We continue to believe in Pfizer's strong growth track record in power brands and capability in new launches on a fairly consistent basis (recent launches from parent's staple- Zavicefta (anti-infective), Eliquis (CVS), Xeljanz (pain management)

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GladiatorStocks_Pfizer_Aug20.pdf

Shares of PFIZER LTD. was last trading in BSE at Rs.4835 as compared to the previous close of Rs. 4797.55. The total number of shares traded during the day was 2619 in over 636 trades.

The stock hit an intraday high of Rs. 4904.5 and intraday low of 4763.55. The net turnover during the day was Rs. 12672541.

Source : Equity Bulls

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