Pfizer's Bull's Rebuttal
by Paul Larson ([email protected])

My associate, Louis, seems to be quite fascinated by the fact that Pfizer's stock price has accelerated faster than the past earnings growth. Could it be that Pfizer's stock was undervalued to begin with three years ago? Just because a stock is expensive relative to yesteryear does not mean it is absolutely overvalued today. This is especially true when blockbuster products like Viagra were still far away from market back then.

Speaking of Viagra, let me restate that the past financial results do not reflect any of the sales of the hot drug. I also find it interesting that the company has yet to spend a nickel in marketing. Yet, I bet you, dear Fool, know exactly what Viagra does, what it costs, and what company sells it. Just like Louis said, "Viagra is common knowledge to not just CNBC junkies, but to every person on the planet who has ever thought about investing." How many marketing types would give up their left arm to get their product to be such a household name? Pfizer won an absolute promotional coup d'etat with Viagra's introduction. Having its name plastered on every imaginable media outlet over the past few months is certainly going to pay dividends down the road.

The social commentary in the bear case also seems to be slightly misguided to this Fool. Sure, Viagra is a recreational drug. It is a lifestyle drug that is not exactly high up on many people's hierarchical needs. Nevertheless, sex is big business. Period. In the past, people have gone to extraordinary lengths seeking to regain potency -- they've even gone as far as drinking tiger-testicle soup. Now there is a drug out there that is available, relatively inexpensive compared to other treatments, easy to use, and has minimal side effects for the vast majority of those who use it. I don't think Viagra is a flash in the pan. Viagra is here to stay.

One other interesting aspect of this drug is that many who don't really need it are breaking down doors to get a few blue pills. As someone recently interviewed in The Wall Street Journal said, "I don't think I need it, but you always want more." Many curious men will be trying this pill, and many others may be taking it "just in case" their performance (and esteem) needs a bit of a boost.

In any case, whether Viagra is a colossal success or merely a big success, Pfizer has numerous other cash cow products in its pasture. Free cash flow is a wonderful thing, and I think this company should change it's ticker to "MOO" to more accurately reflect just how much of a cash cow the company truly is.

Next: The Bear Responds