Will Pfizer transform in response to Starboard’s activism?

Hedge fund Starboard Value’s latest activist campaign targeting Pfizer (NYSE:PFE) has boosted the company’s shares in recent days even as Wall Street remains divided over its prospects.

Early this week, the Wall Street Journal reported that Starboard wanted value-creating measures at Pfizer (PFE) after taking approximately a $1B stake in the struggling COVID-19 vaccine maker.

The move, backed by former Pfizer (PFE) executives Ian Read and Frank D’Amelio, sent the company’s stock to a two-month high on Thursday, with PFE CEO Albert Bourla agreeing to meet with the activist investor next week.

Since the report, Pfizer (PFE) had outperformed its big pharma rivals until Wednesday when Read, who led PFE from 2010 to 2018 as CEO, and D’Amelio, the company’s CFO from 2007 to 2021, dropped out of the campaign.

Seeking Alpha analyst ONeil Trader is among the skeptics of Starboard’s move, noting in a recent article that the New York-based investment adviser has a checkered past when it comes to biopharma activist campaigns.

“Additional cost cutting, more share repurchases, or management and board changes are unlikely to make a change for the better at Pfizer,” the analyst wrote, adding that the management has already taken those measures.

Wells Fargo analyst Mohit Bansal agreed. “We remain skeptical on what an activist investor could bring to the table,” Bansal wrote with an equal weight rating and a $30 target on Pfizer (PFE).

“In many cases, these involvements spur cost management, but PFE is already doing that. PFE’s issue is a top-line challenge where execution is key,” Bansal added.

BMO Capital Markets analyst Evan David Seigerman offered similar views, arguing that while Pfizer (PFE) was the ideal target for an activist campaign, its turnaround story, similar to Eli Lilly’s (LLY), could take years.

“We understand why an activist might think that Pfizer is the right story to get involved in, but management appears to actually be undertaking many of the corrective actions to right the ship,” the analyst added with an Outperform rating and a $36 target on the stock.

However, Seeking Alpha analyst Hawkinvest sees value in Starboard’s involvement. “I think they see a lot of value in this stock, and Starboard’s involvement could become a catalyst to unlock value,” Hawkinvest wrote.