Starboard Value, an activist hedge fund, is increasing pressure on Pfizer’s (PFE) board to hold executives accountable for years of underperformance and is calling for a turnaround. During a presentation at the 13D Active-Passive conference, Starboard CEO Jeff Smith expressed his disappointment over the more than $20 billion drop in Pfizer’s market value.
Earlier this month, Starboard disclosed a significant $1 billion stake in Pfizer, signaling its intention to actively influence the company’s strategic direction. The activist fund has a history of engaging with undervalued companies to drive value for shareholders.
Activist Criticizes PFE’s Investment Decisions
Starboard criticized Pfizer’s management for poor returns on investments in research and development (R&D) and mergers and acquisitions. The activist highlighted the underperformance of large-scale acquisitions like Global Blood Therapeutics and Seagen, which have failed to meet expectations.
Additionally, Starboard pointed to Pfizer’s disappointing pipeline of new drugs, noting that its experimental weight-loss treatments have fallen short of initial sales targets. The hedge fund also criticized the company’s capital allocation strategy, urging for a more disciplined approach to generate higher returns.
Also, the activist believes that PFE’s low valuation and leveraged balance sheet hinder its ability to pursue further acquisitions, limiting future growth prospects. This, combined with the company’s lackluster performance, makes it a prime candidate for a change in leadership.
Is PFE Stock a Good Buy?
Turning to Wall Street, PFE stock has a Moderate Buy consensus rating based on seven Buys and 13 Holds assigned in the last three months. At $32.50, the average Pfizer price target implies a 12.69% upside potential. Year-to-date, shares of the company have gained 4.6%.
