UPDATE 1-Goldman Sachs downgrades Pfizer to neutral

(Changes source, adds details)

June 5 (Reuters) - Goldman Sachs downgraded Pfizer Inc PFE.N and removed the world's biggest drug maker from its Americas conviction list, citing the stock's underperformance and said it does not expect near-term catalysts to drive valuation.

The brokerage, which cut its rating on Pfizer to "neutral" from "buy," said the company's share price has fallen 28.7 percent since Jan. 4, 2007, versus a 2.9 percent decline in the Standard & Poor's 500 Index .SPX and a 20.4 percent fall in its coverage universe.

Goldman said it cut its price target on Pfizer to $22 from $26 as near-term pipeline products decrease in value and recent safety issues pressure the brokerage’s forecasts for the company’s anti-smoking drug Chantix and cancer drug Sutent.

Researchers had recently said hundreds of patients taking Chantix reported serious accidents, vision problems and heart trouble, while some patients who took Sutent, a pill used to treat kidney and stomach cancers, developed heart failure.

Goldman added Eli Lilly and Co LLY.N to the Americas conviction list and retained its "buy" rating on the stock. However, it lowered its price target on the stock by $2 to $58, reflecting multiple contraction in the sector.

The brokerage said it upgraded Schering-Plough Corp SGP.N to "buy" from "neutral" as new pipeline additions have raised its risk-adjusted sales estimates. Goldman raised its price target on Wyeth WYE.N, which it rates "neutral," to $50 from $48. The brokerage cut its price targets on Merck & Co MRK.N to $43 from $48 and on Bristol-Myers Squibb Co BMY.N to $24.50 from $28, while keeping its "neutral" rating on both the stocks. (Reporting by John Tilak in Bangalore; Editing by Deepak Kannan)