It could be forgiven, especially these days, for thinking that drug maker Pfizer (NYSE: PFE) was all COVID, all the time.
There’s a lot more to Pfizer than just COVID-19 vaccines, though. The company recently demonstrated as much with approval of a new drug targeting a disease that has nothing to do with COVID-19. I’m bullish on Pfizer because not only does this company have a share in fighting one of the biggest diseases around, it’s not stopping there.
Pfizer spent much of the early going of the last year flat. From earliest January to early April, the company hovered around the $33-$35 range.
Early April saw the company begin to rise. The rise largely plateaued again in the $37-$39 range until July, when the fireworks truly began for Pfizer. Late July into mid-August saw a hefty jump for Pfizer stock.
Though much of those gains were lost over the next two months, an October surprise waited in the wings. October’s departure rang in a nearly two-month expansion for Pfizer stock, leading to the company clearing $60 a share for the first time on December 15. The company has, however, lost a bit of that gain since.
The latest news gave Pfizer an edge in the premarket. Pfizer got approval for its new drug, Xeljanz. Xeljanz is geared toward treating patients with “active ankylosing spondylitis who had failed to respond to at least one tumor necrosis factor inhibitor, including AbbVie’s Humira.”
The European Commission approved the drug just a few weeks prior for the same purpose.
Wall Street’s Take
Turning to Wall Street, Pfizer has a Moderate Buy consensus rating. That’s based on seven Buys and 11 Holds assigned in the past three months. The average Pfizer price target of $57.35 implies 4.3% upside potential.
Analyst price targets range from a low of $46 per share to a high of $75 per share.
Another Brick In the Already Expansive Wall
The part about Pfizer that makes it most attractive as an investment is its sheer range of options. Yes, COVID did great things for Pfizer. Pfizer could bring millions of shots’ worth of COVID-19 vaccine to market. Thanks to boosters, it’s starting to look like the COVID line will be profitable for years.
Yet, no company can last long on one key item, especially when there are so many competitors in the field already. If there weren’t already competitors, the success of Pfizer’s COVID line would have brought more.
That’s why the news about Xeljanz is not only important to investors, but outright crucial to Pfizer’s future. While most of us will never have to worry about ankylosing spondylitis, those who have it will. In fact, being able to treat anklyosing spondylitis could represent a little better than $200 million every year for Pfizer, thanks to several thousand people in the U.S. with the disease.
The fact that it requires neither injection nor infusion will likely be even more welcome to those suffering from this inflammatory disease. Such a medication will make treatment simpler, and thus prove a draw.
That should give Xeljanz a boost right out of the gate. Patients have seen some improvement, however, with alternative treatments like diet and certain supplements. Yet the all-in-one nature of Xeljanz will likely make it that much more attractive.
Pfizer will need that influx of cash if it wants to maintain its impressive dividend history. Pfizer’s dividend history shows that the company has been raising its dividend since 2019. Looking farther back, we can see the pattern has held true back to 2013 as well.
A company that can regularly raise dividends over a decade is clearly doing something right. When part of that decade included a pandemic, the clarity is only amplified.
Concluding Views
Granted, Pfizer is trading near the top right now.
However, the company may actually achieve its highest targets. Even if it doesn’t, Pfizer has already proven itself a solid, stable company that continues to innovate and produce quality products.
That plural makes the case for Pfizer better than many other things could. Pfizer may be one of the better income investments out there, and there’s still room for capital gains. That’s plenty of reason to be bullish on Pfizer.
Download the mobile app now, available on iOS and Android
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates. Read full disclaimer >
