1. Fatma Salam

2. Pfizer is an American multinational pharmaceutical corporation that was founded in New York City in 1849 as a manufacturer of fine chemicals. Pfizer increased its global presence through the acquisitions of Warner-Lambert in 2000 and Pharmacia in 2002. Additionally, through strategic partnerships and acquisitions of diversified businesses, such as Wyeth in 2009, Pfizer solidifies its place as one of the most diversified companies in the global health care industry. Their enormous size, well-known products, and diversity allow Pfizer to control much of the pharmaceutical industry and make it the world leader in discovering, developing and marketing innovative medicines to improve health and save lives. Examples of its popular products; Zithromax, Prevnar, Lipitor, Centrum, Advil, and Nexium.

3. Mergers and acquisition Acquisition of Hospira Hospira will bring a new set of generic product offerings to Pfizer, will add revenue immediately, creating significant shareholder value over the long term. Pfizer's guidance has indicated that the acquisition will add $0.10- $0.12 to earnings per share overall in the first twelve months and the company projects $ 800 million in cost savings by 2018. The added value and increased earnings per share should boost Pfizer's stock value over the long term.

4. Acquisition of Allergan The deal with Allergan could allow Pfizer to take advantage of the far lower corporate tax rate in Ireland. The tax inversion deal will would boost Pfizer's ability to invest in research, it would facilitate and enable wealth creation for shareholders, and it would liberate the company’s balance sheet for future activity and spending and cash flow. the deal would give Pfizer access to Allergan's dominance in the aesthetics field with Botox ($2.4 billion in annual revenue), and ophthalmology markets ($1.3 billion), which analyst described as attractive assets.

5. Paying and Increasing Dividend Pfizer increasing its dividend per share consistently which is adding value to its shareholders. Its 12- month dividend growth is 7.84% that is higher than the industry median. Stock Repurchases Pfizer has spent nearly $8 billion annually repurchasing stock in the last five years which is adding value to shareholders. Pfizer's management is committed to repurchase large amounts of stock with its very strong excess FCF. This makes the stock appealing to investors.

6. S Pfizer is the largest spender in R&D sector with an investment of US$9.4 billion in 2011. Pfizer’s acquisitions have made Pfizer an even more powerful player in the pharmaceutical industry. Pfizer is also present across Europe, Asia, Latin America, Canada and Africa which explains its performance stability during US recession. W The expiration of the patents of many of its unique products. This could make the company weaker because competitors could then produce copies of these products. Negative brand image due to involvement in the largest healthcare fraud of marketing its drug illegally which resulted in a huge payouts. O The high revenue, profits and funds will enable the company to develop new drugs that would drive revenue growth and sustain Pfizer’s performance. Mergers and acquisitions by Pfizer provide to expand its market share and penetration into the global market and will allow cost-saving synergies. T The outstanding competition of regional markets along with the emerging markets of China and India, higher cost of its drugs leading to cheaper substitutes. Large manufacture and low research for new inductions in the market could decline the profitability of the company. Also, Economic downturns

7. Pfizer's revenues are declining since 2011and the gross profit is declining since 2012. Pfizer's total net income peaked in 2013 and then declined significantly in 2014 and 2015. short term borrowing has significantly increased between 2014 and 2015 which contributed to increasing the total current liabilities between 2014 and 2015. Operating cash flow and free cash flow increased in 2013 then declined in 2014 and 2015.

8. Profitability Gross profit margin is higher than the industry median. Net profit margin is lower than Merck and Novartis but still higher than the industry median which indicates that Pfizer is profitable company that has efficient operations. The return on equity is higher than the median industry which means the return the shareholders are getting from their invested dollars is high. Liquidity Current ratio is lower than the industry median. Low current ratio from creditors’ perspectives indicates that they won’t be able to pay the debt due to higher liabilities that decrease their ability to meet their financial obligations, if liabilities are more than assets that means more financial leverage. From shareholders’ viewpoint means less money tied to assets, or less inventory holding.

9. Asset Utilization Total asset turnover is lower than the industry median which indicates that the firm is not generating as much business given its total asset investment. Day sale outstanding is significantly higher than the industry median, the longer average collection period indicates that customers are not paying their bills on time. Inventory turnover (6.83) is higher than industry median (2.26) which indicates that Pfizer is not holding much inventories.

10. Debt to equity ratio is higher than the industry median means that Pfizer has higher amount of debt which may result in decreasing its stock price and reducing the future free cash flow. Leverage ratio is higher than the industry median which means that Pfizer has high financial leverage. The high financial leverage leads to decline in the firm’s value. High ratios can also limit the company's ability to borrow, thereby lowering the company's financial flexibility and increasing the risk associated with financial hardships. The increase in financial leverage may result in lowered stock price and decreased future free cash flow.

11. 12- month dividend growth is higher than the industry median which is an indication of past company strength and dividend payment policy. Dividend per share is increasing to $1.10 that is higher than the industry median. The dividend payout ratio (dividend per share/ earning per share) is 63% and increased in 2015 to 73% which seems high since the ratio above 50% is considered a warning flag and the lower the ratio, the more secure the dividend. Earning per share growth is significantly lower than the industry median. The debt to asset and debt to equity ratios are higher than the industry median, higher ratios indicates higher financial leverage and therefore more risk. Pfizer’s current dividends are not safe so they should not increase their dividend.( Based on earning per share)

12. Based on the company’s cash flow, the company produces a lot more FCF than net income. This is because Pfizer is in a business that requires an enormous amount of R&D and when that hits the income statement, it reduces net income. Regarding the safety of dividends, Pfizer is only paying out 40% to 50% of its FCF each year so that is safe. Dividend coverage ratio (cash flow per share/ dividend per share) =2.46/1.10= 2.2. the high rate indicates that the dividends are secure.

13. The estimated P/E = 26 Target price P= $ 34.85 Using the website valuepro.net for the discounted cash flow model for stock valuation The intrinsic value at growth rate of 12% and equity risk premium of 3% is $ 54.62. The intrinsic value well above the current price of 32.59, indicating the company is significantly undervalued.

14. The company appears to be an excellent large cap pharma stock to buy. The acquisition of Hospira, Inc. that promises to spur both earnings and revenue growth and adds a new dimension to Pfizer's product line. Neither earnings forecasts nor the current stock price reflect the new markets, synergies and growth promised by the Hospira acquisition. Pfizer appears to be an attractive value for conservative investors looking for an addition to a well-diversified portfolio and for investors seeking a low- risk income play within a large pharma space. Dividend yield and its commitment to dividend payouts and share repurchases should still make the stock appealing to investors.