Pfizer Inc. (PFE) is pursuing scientific breakthroughs and developing innovative medicines to improve patients’ health worldwide. “Over the next 18 months, we expect to have up to 19 new products or indications in the market – including the five for which we have already begun co-promotion or commercialization earlier this year,” said Dr. Albert Bourla, the company’s Chairman and CEO.
PFE reported solid third-quarter results, demonstrating commercial strength across most of its business areas.
David Denton, Chief Financial Officer and Executive Vice President stated, “We saw strong operational performance this quarter from key brands such as Paxlovid and Eliquis, particularly in the U.S., as well as the continued impressive launch of Prevnar 20 for adults in the U.S. In addition, we continue to make progress toward our goal of adding at least $25 billion in risk-adjusted 2030 revenues to Pfizer’s portfolio through business development.”
Furthermore, PFE raised its outlook for fiscal 2022. The company increased the lower end of full-year 2022 revenue guidance to a range of $99.50 to $102 billion. It raised revenue guidance for Comirnaty by $2 billion to approximately $34 billion and reaffirmed revenue guidance for Paxlovid of $22 billion. Also, PFE increased and narrowed adjusted EPS guidance from $6.30-6.45 to $6.40-6.50.
On December 9, PFE’s board of directors declared an increase in the quarterly cash dividend on common stock to $0.41 for the first quarter of 2023, payable on March 3, 2023. The company’s ability to increase its dividend is a testament to its strong financial performance and reinforces its commitment to returning value to shareholders.
Moreover, the company has raised its dividends for 12 consecutive years. PFE’s dividend payouts have grown at CAGRs of 5.5% and 5.7% over the past three and five years, respectively. Its current dividend yield is 3.20%, while its four-year average yield is 3.63%.
Shares of PFE have gained 3.7% over the past month to close the last trading session at $51.24.
Here is what could influence PFE’s performance in the upcoming months:
Positive Recent Developments
On December 14, 2022, PFE and China Meheco Group Co Ltd. (China Meheco) signed an agreement under which China Meheco will import and distribute PFE’s oral COVID-19 treatment Paxlovid in mainland China amid the resurgence of covid cases. This deal is expected to boost the company’s revenue streams.
Furthermore, on December 8, PFE and BioNTech SE (BNTX) achieved the U.S. Food and Drug Administration’s Emergency Use Authorization for their Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine. It marks a significant achievement for the companies.
Robust Financials
For the fiscal 2022 third quarter ended September 30, 2022, PFE reported income from continuing operations of $8.65 billion, up 5.8% year-over-year. Non-GAAP net income attributable to PFE common shareholders grew 39.7% from the year-ago value to $10.17 billion. In addition, non-GAAP earnings per common share attributable to PFE common shareholders came in at $1.78, up 25.4% year-over-year.
Favorable Analyst Estimates
Analysts expect PFE’s revenue for the fiscal 2022 fourth quarter (ending December 31, 2022) to come in at $24.36 billion, indicating an increase of 2.2% from the prior-year period. Also, the company has topped the consensus EPS estimates in each of the trailing four quarters, which is impressive.
The company’s revenue and EPS for the current fiscal year 2022 are expected to increase 23.2% and 46.5% from the previous year to $100.17 billion and $6.48, respectively.
High Profitability
PFE’s trailing-12-month gross profit margin of 66.17% is 20.2% higher than the 55.03% industry average. Its trailing-12-month EBITDA margin of 44.81% is 1,102.7% higher than the 3.73% industry average. Also, the stock’s trailing-12-month net income margin of 29.81% compares to the industry average of negative 5.94%.
Moreover, PFE’s trailing-12-month ROCE, ROTC, and ROTA of 35.59%, 20.30%, and 15.24% compare to the industry averages of negative 39.73%, 22.01%, and 31.20%, respectively.
Discounted Valuation
In terms of forward non-GAAP P/E, PFE is currently trading at 7.91x, 58.9% lower than the industry average of 19.23x. The stock’s forward EV/EBITDA multiple of 6.51 is 50.3% lower than the industry average of 13.10. Also, its forward EV/EBIT of 7.13x compares with an industry average of 17.33x.
Furthermore, in terms of forward Price/Sales, PFE is currently trading at 2.87x, 33.4% lower than the industry average of 4.31x. Its forward Price/Cash Flow of 7.58x is 53.7% lower than the industry average of 16.38x.
POWR Ratings Show Promise
PFE has an overall A rating, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. PFE has an A grade for Value, consistent with its lower-than-industry valuation metrics. In addition, the stock has a B grade for Quality, consistent with its higher-than-industry profitability metrics.
PFE is ranked #3 out of 162 stocks in the Medical-Pharmaceuticals industry.
Beyond what I have stated above, we have also given PFE grades for Sentiment, Growth, Momentum, and Stability. Get access to all PFE ratings here.
Bottom Line
PFE continues to show unwavering commitment to bringing breakthroughs, revolutionary medicines, and vaccines to patients. The company reported strong third-quarter 2022 results and raised its full-year 2022 outlook. Furthermore, amid an uncertain macro environment, the company could cushion one’s portfolio with its high-yield dividend.
Given its solid financials, improved profitability, attractive valuation, reliable dividends, and promising growth prospects, this stock could be an ideal addition to your portfolio for years to come.
How Does Pfizer Inc. (PFE) Stack up Against Its Peers?
PFE has an overall POWR Rating of A. One could also check out these other stocks within the Medical-Pharmaceuticals industry with an A (Strong Buy) rating: Johnson & Johnson (JNJ), Novo Nordisk A/S ADR (NVO), and Bristol-Myers Squibb Co. (BMY).
PFE shares fell $0.04 (-0.08%) in premarket trading Tuesday. Year-to-date, PFE has declined 0.00%, versus a 0.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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