P&U Still Good Value, Say Analysts

Pharmacia & Upjohn's share price has declined since the news broke ofchief executive John Zabriskie's resignation (Marketletter January 27), and several analysts have noted that now is a good time to buy the stock. The analysts felt that the decentralized company might even do better now, noting that Mr Zabriskie and his staff in London did not move quickly enough in merging the two companies.

The difficulties of merging three different work cultures - Upjohn's American culture, with Pharmacia's Swedish work ethic and also that of the latter's subsidiary in Italy, Farmitalia Carlo Erba - became apparent as the firm issued profits warnings and cut earnings estimates (Marketletters passim).

The company's two downward estimates of its profits produced "a management credibility issue and concern that management may not be on top of all parts of the businesses," said Robert Uhl of Salomon Brothers, who feels that P&U's stock price would "remain stuck in the high 30s" for at least the next three-to-six months until problems resulting from the merger, and currency rates, are resolved, and a new chief executive is named.