UPDATE 1-Pfizer CEO switch may mean new strategy, shares up

* Change could bring sales, share buybacks -analysts

* Investors may worry move made during merger integration

* Pfizer shares rise 1.1 percent in down market
(Adds analyst comments, rewrites first paragraph)

By Lewis Krauskopf

NEW YORK, Dec 6 (BestGrowthStock) – Investors welcomed the sudden
departure of Pfizer Inc (PFE.N: ) CEO Jeffrey Kindler by pushing
up the stock in the hopes that a new leader will more act more
aggressively to revive the giant pharmaceutical company.

While questions remain about the abruptness of Kindler’s
retirement, announced on Sunday evening, Pfizer shares rose 1.1
percent on Monday as investors bet that new CEO Ian Read will
push through sales, cost cuts, share buybacks or higher
dividends for the world’s largest drugmaker.

Pfizer also may seek more acquisitions as it confronts a
daunting milestone in November 2011 — the U.S. patent
expiration of the top-selling Lipitor cholesterol drug,
analysts said.

“People are hopeful there will be some more aggressive
restructuring that takes place within Pfizer,” said Edward
Jones analyst Linda Bannister. “We’re up against the patent
expiration of Lipitor…It’s right around the corner.”

Kindler, 55, said in a statement issued by Pfizer that the
job had been “extremely demanding” and that he wanted to
“recharge my batteries.” (For a Breakingviews column on
Kindler’s departure, click here: [ID:nN06130833] )

Since Kindler became CEO in July 2006, Pfizer’s shares have
fallen roughly 27 percent compared with a 10 percent decline
for the NYSE Arca Pharmaceutical index (.DRG: ) of large U.S. and
European drugmakers.

“When a company’s shares underperform, shareholders express
their frustrations to the board, and the board expresses its
frustrations by making management changes,” said Les
Funtleyder, portfolio manager of the Miller Tabak Healthcare
Transformation Fund, which does not hold Pfizer shares.

Goldman Sachs analyst Jami Rubin applauded the change,
saying she has “long argued that Pfizer should be more
aggressive in achieving greater efficiencies in both its $28.5
billion operating expenses base as well as its massive balance
sheet and portfolio of various businesses, some of which should
be divested.”

“We are delighted to see the board taking action as
Pfizer’s share price continues to underperform amid a flurry of
questions about strategic direction,” Rubin said in research
note.

Rubin said Pfizer should remove its 2012 forecast, which
she said was set “unrealistically high” and has been a source
of anxiety.

Pfizer’s 2012 forecast includes the first full year of
impact from losing exclusive U.S. rights to Lipitor, which had
sales of $11.4 billion last year, and has implied somewhat
stable results despite the Lipitor loss.

Kindler’s departure comes more than a year after the
drugmaker completed the signature move of his tenure — the $67
billion acquisition of rival Wyeth.

That acquisition, which brought Pfizer more access to
biotech drugs and vaccines as well as cost cuts, was intended
to help Pfizer maneuver through the decline of Lipitor.

But the deal has failed to spur stock gains. Pfizer shares
have fallen 5.2 percent since the company bought Wyeth in
October 2009. By contrast, shares of Merck & Co (MRK.N: ) have
jumped 15 percent since it clinched its big purchase of
Schering-Plough Corp, in November 2009.

JP Morgan analyst Chris Schott said the CEO change could
lead to more aggressive actions at Pfizer, including share
repurchases or dividend increases, as well as more business
development or divestitures.

“While a CEO transition in the midst of a major merger
integration will likely create added uncertainty with the
story, the key question, in our view, remains on the changes
this transition will bring to the Pfizer story,” Schott said in
a research note.

Kindler drove Pfizer to become a leaner organization, and
the Wyeth deal helped diversify the company’s revenue base and
decrease its dependence on Lipitor, said Deutsche Bank analyst
Barbara Ryan.

“Despite these accomplishments, Jeff was not able to
develop a sufficient level of support from the investment
community,” Ryan said in a research note. She said his
departure likely resulted from a “mutual assessment” on the
part of the board and Kindler.

Pfizer’s appointment of Read, who joined the company in
1978, was a “logical one,” Ryan said, noting that he is
“well-regarded within the organization.”

Rubin of Goldman Sachs called Read a “seasoned executive
with over 20 years of experience running many different regions
and businesses in pharma.”

“Some investors may be concerned that the new CEO may not
shake up the company to the degree that some would like to see,
but he has the ability to focus the strategy and get the ship
going in the right direction,” Rubin said.

But Read can only do so much restructuring, and the company
will need some promising experimental drugs to succeed, Edward
Jones’ Bannister said, citing drugs in development for pain,
rheumatoid arthritis, blood clots and Alzheimer’s disease.

“In order for the stock to really start to move on a
sustainable basis, it’s going to have to come from positive
results from their pipeline,” Bannister said.

Pfizer’s shares were up 33 cents at $17.06 in morning
trading on the New York Stock Exchange.
(Reporting by Lewis Krauskopf and Ransdell Pierson. Editing by
Maureen Bavdek and Robert MacMillan)

UPDATE 1-Pfizer CEO switch may mean new strategy, shares up