Holdings Update: Sell Pfizer (PFE)

photo of a laboratory machine filling vials with red caps

The Jensen Investment Team Sells Position in Pfizer

March 2024

The Jensen investment team sold portfolio holding Pfizer (PFE) from the Jensen Quality Growth Strategy due to a deterioration in the company’s business fundamentals.

Most recently added to the Strategy in 2018, Pfizer is a global biopharmaceutical company. Its top-selling drugs include Eliquis (blood thinner), Prevnar (pneumococcal vaccine), Paxlovid (COVID-19 antiviral) and Comirnaty (COVID-19 vaccine).

Our sale decision was driven by weaker-than-expected financial results, largely driven by a sharp decline in COVID-19 sales (Comirnaty and Paxlovid) and the company’s $43 billion acquisition of Seagen in 2023. The combination of these two factors resulted in a stretched balance sheet and constrained free cash flow generation. Strategically, we had been supportive of Pfizer’s use of excess free cash flow to bolster future growth prospects via tuck-in acquisitions of promising drug pipeline candidates. However, in our view, the Seagen acquisition was more transformational in nature and has reduced Pfizer’s financial flexibility in the event of any further negative surprises.

We have deployed the sale proceeds into investments with more compelling business opportunities and favorable stock price valuations.

Please click here to view a list of the Jensen Quality Growth Strategy’s current holdings.

Strategy holdings are subject to change and should not be considered recommendations to buy or sell any security.

The discussion of the specific security identified in this article is solely intended to illustrate the application of our investment approach. Our views expressed herein are subject to change and should not be construed as investment advice and are not designed or intended as a basis or determination for making any investment decision for any security. This information is current as of the date of this material and is subject to change at any time, based on the market and other conditions. Past performance is no guarantee of future results.

Jensen Investment Management, Inc., is an investment adviser registered under the Investment Advisers Act of 1940. Registration with the SEC does not imply any level of skill or training.

© 2024 Jensen Investment Management.