New York-based Pfizer Inc. (PFE) develops, manufactures, distributes, and sells biopharmaceutical products worldwide. The company provides medicines and vaccines in various therapeutic areas, including cardiovascular metabolic and women’s health; biologics, small molecules, immunotherapies, biosimilars; and COVID-19.
Earlier this week, PFE and Valneva SE (VALN), a specialty French vaccine company, entered into an equity subscription agreement. As part of the agreement, PFE will invest $95 million for an 8.1% stake in VALN to further support the strategic Lyme partnership between the two companies.
Also, the companies have updated the terms of their Collaboration and License Agreement signed in April 2020 for Lyme disease vaccine candidate VLA15. VALN is required to pay 40% of the remaining development costs, compared to the 30% initially agreed upon. PFE is required to pay roughly 14% to 22% for tier royalties to Valneva, as opposed to 19% in the initial agreement.
“We are excited to continue partnering with Valneva on the development of VLA15 and look forward to working together to progress the program with the goal of bringing forward a vaccine that could help prevent this debilitating disease,” said Kathrin U. Jansen, Senior Vice President and Head of Vaccine Research & Development at Pfizer.
The stock has gained 9.5% over the past nine months and 22% over the past year to close the last trading session at $48.11.
Here is what could influence PFE’s performance in the upcoming months:
Robust Financials
PFE's revenues increased 76.8% year-over-year to $25.66 billion in the fiscal 2022 first quarter ended March 31, 2022. The company’s income from continuing operations grew 61.3% year-over-year to $7.88 billion.
Furthermore, the company’s non-GAAP net income and non-GAAP earnings per common share attributable to PFE common shareholders came in at $9.34 billion and $1.62, registering an increase of 74.5% and 70.5% from the prior-year period, respectively.
Favorable Analyst Estimates
Analysts expect PFE's revenue for the fiscal 2022 second quarter (ending June 2022) to come in at $26.26 billion, representing a rise of 38.4% from the same period in 2021. Also, Street expects the company's EPS for the ongoing quarter to increase 74.2% year-over-year to $1.86.
It’s no surprise that the company has surpassed the consensus revenue estimates in three of the trailing four quarters and the consensus EPS estimates in each of the trailing four quarters.
Higher-than-industry Profitability
PFE’s trailing-12-month gross profit margin of 60.52% is 9.7% higher than the 55.18% industry average. And its trailing-12-month EBIT margin of 34.66% is 3,426.8% higher than the 0.98% industry average. Furthermore, the company’s trailing-12-month EBITDA margin of 40.15% is 918.2% higher than the industry average of 3.94%.
Discounted Valuation
In terms of forward non-GAAP P/E, PFE’s 9.41x is 49.6% lower than the 18.67x industry average. Likewise, its 5.69x forward EV/EBITDA is 54.4% lower than the 12.49x industry average. Furthermore, the stock’s forward Price/Sales of 2.59x is 36.9% lower than the industry average of 4.11x.
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.
PFE has a B grade for Quality, consistent with its higher-than-industry profitability ratios. In addition, the stock has a B grade for Value, in sync with its lower-than-industry valuation ratios.
PFE is ranked #6 out of 167 stocks in the Medical - Pharmaceuticals industry.
Beyond what I have stated above, we have also given PFE grades for Sentiment, Momentum, Growth, and Stability. Get access to all the PFE Ratings here.
Bottom Line
PFE reported strong financial results for the fiscal 2022 first quarter and affirmed continued growth for full-year 2022. Furthermore, the company is well-positioned to benefit from its products and research. So, it could be wise to invest in the stock now.
How Does Pfizer (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: Merck & Co. Inc. (MRK), Novartis AG (NVS), and AbbVie Inc. (ABBV).
PFE shares were trading at $49.34 per share on Wednesday afternoon, up $1.23 (+2.56%). Year-to-date, PFE has declined -15.12%, versus a -20.40% 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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