Early this week we are running a list of stocks that have been in a turnaround plan, yet the stocks and the businesses haven’t turned around.  Could these be the stocks to watch for 2008?

Pfizer (NYSE:PFE) is perhaps the most troubled Big Pharma.  It has been in a turnaround that just hasn’t turned.  Many expect the pressure to stay into 2008 as well.  This has patents expiring sooner rather than later, competitors still taking market share in some of its historical key winning blockbuster drugs, and a lack of any serious drug pipeline.  Hey, that is Pfizer.  Its CEO is still fairly new but hasn’t ever made a dent here.  This is VERY hard to turn because its market cap is $157 Billion so the law of large numbers is a hitch.   

Pfizer sold off its consumer products unit for some $16 Billion to J&J (NYSE:JNJ) to be a pure drug company.  That hasn’t managed to help and may have in fact been the wrong play since its drug growth seems limited.  Maybe that consumer products company was one of the more steady businesses after all.  Pfizer is going to need to do not one big biotech deal, but may need two or three key deals so that it can transform and show some more promise ahead.  Analysts aren’t looking for anything in 2008, so any upside might be the difference.

Troubled drug companies can overcome adversity, even when things are mounting against them.  We wouldn’t even be surprised if the company issues more pink slips and cost cutting measures.  Merck (NYSE:MRK) was thought to be in the same boat a few years ago and it has come screaming back with a vengeance.  Even Bristol-Myers Squibb (NYSE:BMY) managed to get off of its low-$20’s base.  Yet Pfizer is just stuck in the low-$20’s to mid-$20s and it’s been a pig for over 3-years now.  If the company can find a few deals with promise for growth into 2009 and beyond, investors may start to take cash out of Merck and direct it the way of Pfizer.

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Jon C. Ogg
December 17, 2007

JOn Ogg can be reached at [email protected]; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.

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