A one-year chart of Pfizer (PFE) looks more like a black diamond slope in Vail than a stock price graph. The stock has fallen almost 40 percent over the last 12 months. Now, at $24 per share, you hear a lot of recommendations to buy PFE. The 3.1 percent dividend yield is very attractive, combined with a 2005 p/e ratio of less than 12.

After holding off in the low 30's and high 20's, Pfizer shares at today's prices don't have too much downside if you want to try and catch a falling knife. A Celebrex withdrawal would prompt significant selling, but aside from that, most of the bad news has been priced in.

The issue really is growth. Money managers on CNBC will exclaim that Pfizer hasn't traded at 11 or 12 times earnings in years, with historical p/e ratios ranging from 17 to 30 times over the last decade. The problem is, Pfizer was growing nicely back then, at a 15 percent annual rate. Those days appear to be over as mergers have created a company with more than $52 billion in sales. At this point, a new blockbuster drug (defined as $1 billion in annual sales) contributes less than 2 percent to Pfizer's total sales.

As a result, sales are expected to be essentially flat. The current 2006 revenue estimate for Pfizer is less than 2 percent higher than the company's actual 2004 sales. While 11 or 12 times earnings may be too modest a valuation, the days of 17-30 multiples on the major drug companies are over in my opinion.