The sharp, sudden entry of an activist investor is raising hopes that change might come to the company.
Pfizer (PFE 3.46%) was a stock on the move Wednesday, and not because of any news generated by the healthcare company. Reports of a meeting between Pfizer’s leader and an activist investor breathed life into the stock, which closed the day more than 3% higher in price. That gain well exceeded the 0.7% increase of the S&P 500 index.
An activist meeting is apparently imminent
Late afternoon on Tuesday, the Financial Times (FT) published an article stating that Pfizer CEO Albert Bourla plans to meet that activist investor, Starboard Value. Citing unnamed “people familiar with the matter,” the business newspaper wrote that Bourla is to engage in talks with Starboard, accompanied by at least one other member of Pfizer’s board of directors.
That report came mere days after The Wall Street Journal broke the news that Starboard had taken a stake worth around $1 billion in the American pharmaceutical giant. That would give it a roughly 0.6% holding in the company. Although this is not a major stake, it is sufficient for Starboard to loudly and publicly advocate for change — the typical method of operation for activist investors.
According to the FT‘s sources, Starboard has created an “extensive” slide deck presentation on its ideas for modifications of strategy at Pfizer. However, it has yet to release it.
Post-coronavirus fatigue
While Pfizer is a powerful company, it hasn’t managed to shake its reputation as something of an also-ran following its great success as the co-developer of the coronavirus vaccine Comirnaty (in partnership with German biotech BioNTech) earlier this decade. The company’s post-pandemic fundamentals at times haven’t been impressive; investors will be hoping that if a Pfizer/Starboard summit takes place, it produces good ideas for the former’s approach going forward.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends BioNTech Se. The Motley Fool has a disclosure policy.
