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Investing.com -- Moody’s Ratings has assigned an A2 rating to Pfizer Netherlands International Finance B.V. (PNIF BV), a fully owned subsidiary of Pfizer Inc. (NYSE:PFE) The rating is for the proposed euro-denominated senior unsecured notes offering by PNIF BV. Moody’s has also given a stable outlook to PNIF BV.
The A2 rating given to PNIF BV’s notes is reflective of the full and unconditional guarantee of the notes by Pfizer on a senior unsecured basis. The proceeds from these notes will be deployed for general corporate purposes.
The A2 rating for Pfizer is a testament to its standing as one of the world’s largest pharmaceutical companies. It also takes into account the company’s high margins and good cash flow. Key products such as Eliquis, Vyndaqel, and Padcev are expected to continue their growth trajectory. In addition, Pfizer’s pipeline holds promising opportunities in fields like oncology, immunology, and rare diseases. Pfizer’s revenue and earnings will also be boosted by COVID-19 products like Paxlovid and Comirnaty, albeit to a lesser degree than during the pandemic.
The rating is tempered by an impending patent cliff during the 2026-2028 period. The company also faces industry-wide exposure to drug pricing initiatives, including provisions in the US Inflation Reduction Act (IRA). There is also the ongoing risk of debt-funded acquisitions. While such acquisitions are anticipated to enhance Pfizer’s business profile and pipeline, they also carry the risk of commercial and pipeline execution.
The stable outlook is based on the expectation of a consistent operating performance and generally conservative financial policies from Pfizer. This includes deleveraging following any substantial acquisitions.
A downgrade in the rating could occur due to a weakness in Pfizer’s underlying performance, significant setbacks in the pipeline, or large debt-funded acquisitions. If the debt/EBITDA ratio is sustained above 3.25x, it could lead to a downgrade.
On the other hand, factors leading to an upgrade could include sustained top-line growth in the base business in the mid-single digits, strong pipeline execution, and capital deployment policies that balance the interests of creditors and shareholders. If the debt/EBITDA ratio is sustained below 2.75x, it would support an upgrade.
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