3 Reasons to Buy Pfizer Stock Like There’s No Tomorrow
The pharmaceutical industry can be a tough business. Companies must innovate constantly to stay relevant because patents protecting their proprietary drugs expire. Pfizer (NYSE: PFE), a longtime stalwart in the pharmaceutical sector, enjoyed a growth spurt during the COVID-19 pandemic due to its Comirnaty vaccine and Paxlovid treatment.
Sales and earnings have plunged since the pandemic ended, sending Pfizer stock down over 50% off its former high.
Ironically, the best time to invest in cyclical companies like Pfizer is during these valleys, just before the next growth spurt. Although Pfizer seems headed toward big things over the coming years, the stock has immediate appeal. Here are three reasons to consider buying Pfizer like there’s no tomorrow — today.
As terrible as COVID-19 was for society, it was undeniably a windfall for Pfizer. The company’s two COVID-19 products combined for approximately $56.7 billion in sales in 2022, ballooning its total revenue to $100.3 billion. Naturally, as the pandemic opportunity dried up, it seemed like Pfizer was imploding. You can see sales and earnings spike and then crash in the chart below:
More importantly, revenue and earnings bottomed and began rising again this year. This isn’t a fluke; through nine months of 2024, Pfizer’s specialty care products are up 11% year over year, while oncology sales are up 25%. Comirnaty sales (reported in Pfizer’s primary care portfolio) are down 66% through nine months of 2024 versus last year, but the number is small enough now that it’s not dragging the company down.
Pfizer is focusing on oncology for growth for the rest of the decade. In late 2023, it used its pandemic profits to acquire Seagen for $43 billion to beef up its oncology pipeline. The strategy seems to be working so far. Management is predicting earnings growth between 10% and 18% for 2025, and analysts estimate earnings will grow by an average of 14% annually over the next three to five years.
In other words, Pfizer looks ready to grow again.
Investors don’t have to buy and hope they eventually make money. Pfizer is generously compensating its shareholders for their patience with a dividend that yields 6.3% at today’s share price.
That’s higher than most blue chip stocks, which might raise alarm bells about the dividend’s dependability. However, the facts don’t support that. Management has repeatedly maintained its plans to support (and raise) the dividend and followed through with a 2.4% increase in early December.
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2024-12-31 12:30:00