Citi Prefers These 4 Stocks Over Pfizer On Bottom-Line Concerns

Shares of Pfizer Inc. PFE were trading lower by nearly 2 percent Tuesday morning after analysts at Citi downgraded the stock and offered three alternative recommendations.

Citi's Andrew Baum downgraded Pfizer's stock rating from Neutral to Sell with a price target slashed from $38 to $31. The analyst's downgrade stems from concerns over the company's rising risk to high price Medicare Part D covered oncology drugs, most notably Xtandi, Ibrance and Xalkori.

Baum continued that his concerns prompted him to lower his non-GAAP earnings per share estimates by up to 10 percent through 2022. In fact, the analyst's estimates for the end of the period is 12 percent below consensus estimates.

Looking Beyond Pfizer

As such, the analyst believes Pfizer is now in a position where it needs a deal to at the very least achieve consensus estimates and the likelihood of a "major" transaction is "high." Baum named Bristol-Myers Squibb Co BMY and Allergan plc Ordinary Shares AGN as the two "most probable" targets although analysts at Deutsche Bank recently spoke out against a Pfizer–Brisol-Myers combination.

Now that the analyst recommends selling shares of Pfizer, he is recommending investors instead buy Roche Holding Ltd. (ADR) RHHBY, AstraZeneca plc (ADR) AZN, GlaxoSmithKline plc (ADR) GSK and Bayer AG (ADR) BAYRY.

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