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Pfizer Stock: Plenty Left in the Vial Despite COVID-19 Waning
Stock Analysis & Ideas

Pfizer Stock: Plenty Left in the Vial Despite COVID-19 Waning

Story Highlights

Pfizer has a robust top line due to high vaccine and medicine sales from COVID-19. Moreover, the company’s diversification plans, along with its dividend growth, enhance its potential to grow further and reward investors. 

Pfizer is one of the most talked-about businesses needing no introduction. The pharmaceutical king hit the lottery during the pandemic with the launch of its COVID-19 vaccine, which took revenues to a whole new level.

Pfizer continues to thrive due to sales of its vaccines and COVID-19 pill, generating billions in revenue. Nevertheless, the road ahead might be a little bumpy as COVID-19 cases decline. However, the company’s financial outlook, diversification plans, and cash positioning make it a highly attractive bet for the long haul.

Pfizer Has Depth Beyond Its COVID-19 Vaccine

Pfizer became a household name after the pandemic took everyone by storm. However, the company has a lot more depth in its pipeline. Pfizer sells a number of blockbuster drugs, including its blood thinners, breast cancer medicines, treatment for arthritis, and pneumonia vaccines.

Recently, Pfizer has requested the approval of 10 products, further adding to its already extensive pipeline. Moreover, 27 of its potential drug candidates are in advanced trial phases. Fortunately, the company has a ton of cash on its balance sheet, which enhances its ability to make acquisitions and grow further.

In March, Pfizer acquired Arena Pharmaceuticals for $6.7 billion to widen the range of immuno-inflammatory treatments in its product portfolio. Moreover, the company is planning to purchase ReViral for up to $525 million. This purchase might open up new opportunities for Pfizer by strengthening its top line.

Pfizer has been continuously investing to ensure stable revenue generation. The company announced that it would acquire Biohaven Pharmaceutical (BHVN) for $11.6 billion. Not surprisingly, the company will complete the acquisition all in cash. Biohaven focuses on producing products that fight neurological diseases. The company generated more than $317 million in sales in its first quarter of 2022. Hence, the acquisition could be a massive success for Pfizer.

Sales from its COVID-19 vaccine and pill generated close to $15 billion in revenues in its first quarter alone. Therefore, the reliance on its two growth drivers is apparent. However, it has plenty of other elements that will ensure long-term expansion in the sector.

Pfizer’s Cash Till Keeps Growing

Pfizer has been successful in generating robust sales and building its cash balance. The fact that the company is making acquisitions with cash is a testament to its rock-solid cash position, which stands at $23.9 billion.

PFE doesn’t have the most attractive dividend profile but the company’s dividend climbed 11.1% in the last three years, equaling $1.60 per share when annualized. Furthermore, Pfizer’s dividend yield stands at 3.2%, which is more than double the S&P 500’s yield.

Considering the company’s free cash flow, which has increased by more than 173% since Fiscal 2020, there’s no reason that management will stop the dividend hike. Hence, in the long run, investors should continue to get healthy returns out of their shares in Pfizer.

Pfizer’s first-quarter revenue rose 77% to $25.66 billion. In addition, the company reported non-GAAP earnings per share of $1.62, representing a more than 70% bump from the prior-year period. So, PFE continues to grow at a rapid clip.

Wall Street’s Take

Turning to Wall Street, PFE stock maintains a Moderate Buy consensus rating. Out of 15 total analyst ratings, six Buys, nine Holds, and zero Sell ratings were assigned over the past three months.

The average PFE stock price forecast is $58.92, implying 16.3% upside potential from current levels. Analyst price targets range from a low of $50 per share to a high of $76 per share.

Bottom Line – Is PFE Stock Attractive?

Pfizer’s recent acquisitions can bridge the uncertainties revolving around COVID-19 revenue. Moreover, Pfizer’s diverse portfolio allows the company to generate more free cash flow and revenue in the long run, so investors shouldn’t have to worry about Pfizer’s profitability. In addition, the company’s financial statements make it a potentially stable Buy for the long haul.

Pfizer is in for a solid future ahead with a massive influx of cash and a strong pipeline. The current volatility in the market presents an opportunity for long-term investors to consider grabbing shares well off their highs. On top of that, its lofty dividend yield is a plus. Nevertheless, the pandemic fading away creates plenty of uncertainty around its future growth prospects.

The coronavirus tailwind will last for a while, though, and the future revenue stream surrounding it remains rather unclear. Several experts claim that the pandemic is, in fact, an endemic, which will require consistent booster shots. Such a development bodes incredibly well for PFE. So, if you are looking for a stable stock that offers generous dividends, then PFE stock should be on your radar.

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