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Centrum Broking
Pfizer (Buy)
Target: ₹6,500
CMP: ₹5,570.20
Pfizer’s Q4FY21 earnings were below our estimates. Revenue grew 6.5 per cent y-o-y to ₹53,500 crore, driven by leading brands while hospital and vaccine segments continued to be impacted amid the pandemic. EBITDA was impacted by CRS accruals, adjusting for which, EBITDA margins were almost in-line at 28.4 per cent.
Strong cost efficiencies should help sustain steady margins going ahead.
We expect the Covid-19 vaccine opportunity to be part of the listed entity, as the current vaccine business is part of the same. Even if we assume around 10 crore doses over the coming year, with marketing margins of 8-10 per cent, the opportunity remains significant.
Pfizer’s management is hopeful of achieving in-line or slightly better growth than its MNC peers. The company expects better performance from recently-launched Zavicefta and Zinforo along with Minipress, Meronem and Eliquis. Post the global announcement of the Mylan-Upjohn deal, the management has highlighted its focus on protecting minority shareholder interest. We believe FY22 could be better on both revenue growth and margins. In FY22, lower base should drive faster growth along with better brands contribution; with the exit of Upjohn and CH brands, margins could be better; and we expect more clarity on Prevenar-13 risk from the DPCO perspective and additional competitive scenario.
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