Drugmaker Pfizer (PFE) should be on top of the world right now. With one of a handful of COVID-19 vaccines in its stable and a host of other pharmaceuticals involved, it’s got a killer portfolio. However, the latest earnings report suggests all may not be well at Pfizer. The company was down 3.8% just in premarket trading on Tuesday. That downward momentum continued into Tuesday trading. I remain bullish on Pfizer, however, as there’s a lot more to this company than just a COVID-19 vaccine.
Pfizer’s year in share prices demonstrates what happens to a company that has a vaccine for one of the most widespread diseases the world has seen in a long time. The company spent most of the first quarter plateaued around $35 a share, with very little movement. An upward trend started up in April, allowing it to plateau around $39 this time. The upward trend accelerated in July, as the company challenged $50 per share in mid-August. A slight retracement followed, that lasted until mid-October, before another leg up kicked in. This leg up was much more pronounced, as this time, the company broke the $50 mark and made a serious play for $55. A much smaller retracement kicked in, and one that only lasted days at that. The company then shot up to clear $60 per share, before retracing once more to present-day levels around $50.
Pfizer’s earnings report gave investors clear concerns, prompting the pullback. While the company delivered a beat on earnings, bringing in $1.08 per share against an expected $0.87, revenue proved to be a miss. The company brought in $23.84 billion for the quarter while analysts expected $24.12 billion. The biggest problem proved to be the hospital segment, along with internal medicine. Internal medicine sales were down 3%, reports noted, while hospital sales were flat against the previous quarter.
Wall Street’s Take
Turning to Wall Street, Pfizer has a Moderate Buy consensus rating. That’s based on nine Buys and nine Holds assigned in the past three months. The average Pfizer price target of $60.13 implies 16.31% upside potential.
Analyst price targets range from a low of $54 per share to a high of $75 per share.
More than a COVID Vaccine
It’s hard to count out Pfizer at any point, because it’s built up such an impressive portfolio of drugs over the years. Remember, Pfizer was a fully-functional corporation before COVID-19, and it will continue to be one thereafter. COVID will definitely be a big part of the company going forward; in 2022, it expects $54 billion in sales for its COVID-19 shots and Paxlovid coronavirus treatment pill. It also illustrates one major problem for Pfizer: the low-hanging fruit has been harvested, as COVID vaccines brought in $12.5 billion in sales just in the fourth quarter.
Pfizer isn’t resting on its COVID laurels, though; the company is currently running clinical trials on a vaccine that specifically targets the omicron variant, with a completed version ready next month. There’s also development currently in play for what may be the next generation of vaccine technology: intranasal vaccinations. Vaccines right now are kind of a mixed bag. Some of them aren’t exactly living up to the promise established, and the biggest issue seems to be the injection-based delivery methods. Intranasal vaccines, however, may address this point by delivering the first layer of protection right at the point of contact with many viruses—the nose. Those who develop this technology first are likely to have a significant advantage, especially given the overall size of the vaccine trade.
Pfizer’s dividend history gives reason to back Pfizer. The company’s dividend history is solid going back to 2019 and features regular raises. There’s also one huge special dividend that got in there, which was undoubtedly welcome for investors. The company is also likely to have plenty of solid cash flow to back up its dividend payouts for some time to come.
Concluding Views
Pfizer is currently a solid company. The fact that it’s trading under its lowest price target doesn’t hurt matters either; this looks like a good time to get in. Its current lineup of drugs, along with its COVID-19 portfolio, helps underscore the company’s effectiveness in the field.
The fact that Pfizer is actively working toward developing tomorrow’s revenue streams also helps. It’s one thing to have today’s market solidly on your side, but it’s another to have tomorrow’s. It might be a little more comforting to know how far along Pfizer is on the intranasal vaccine concept. However, it’s a safe bet that development is currently going on therein, lest someone else beat Pfizer to market with it.
Pfizer seems to have both today’s market and tomorrow’s in hand, which makes it an excellent target for investment and leaves me bullish.
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