Pfizer Inc. (PFE) spinoff company Zoetis Inc. (ZTE) is trading for its first day on the New York Stock Exchange, and shares surged upon opening. Analysts at BMO Capital Markets say the spinoff is excellent news for Pfizer shareholders.
Zoetis shares are off and running this morning, on their first day of trading, and they’ve already surged 20 percent. The company is a spinoff of Pfizer Inc. (NYSE:PFE), and the stock opened at $31.50, quite a bit above the expected IPO of $22 to $25 per share and even higher than the actual IPO price of $26 per share.
With the current valuation, Zoetis is worth about $13 billion on its opening day at the New York Stock Exchange. The company’s IPO is the largest one since Facebook Inc (NASDAQ:FB)’s IPO back in May. Zoetis is the company that resulted from Pfizer spinning off its animal health business.
Today, analysts at BMO Capital Markets issued a brief report on shares of Pfizer Inc. (NYSE:PFE) and Zoetis. They see the spinoff as “positive” for Pfizer shareholders. The current valuation of Zoetis is well above their previous estimation of Pfizer’s animal health business, which was between $10.5 and 12 billion. They also believe that Pfizer will “make a tax-free distribution” for the remaining 80 percent of Zoetis sometime in the second half of 2013 or in early 2014.
At that point they believe Pfizer Inc. (NYSE:PFE) shareholders will be able to exchange their shares for shares of Zoetis tax-free and “at a discount” if they desire to do so. Thus they expect that “Pfizer will emerge from the Zoetis separation with a more leveraged” profit and loss statement. BMO Capital analysts are maintaining their Outperform rating and $31 price target on shares of Pfizer. The stock rose more than 1 percent in afternoon trading, Friday.