The COVID-19 beneficiary Pfizer Inc. (PFE) surpassed its EPS estimates by a mammoth 27% in the 2022 third quarter, despite overall market uncertainties and rising recession odds.
PFE possesses sturdy fundamentals. Moreover, the U.S. Food and Drug Administration granted Emergency Use Authorization to PFE and BioNTech SE’s (BNTX) Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine as the third 3-µg dose in the three-dose primary series for children aged six months to 4 years of age. The company is expected to continue to benefit from its vaccines.
PFE has gained 9.4% over the past month to close the last trading session at $51.78. It has gained marginally over the past year and 10% over the past three months.
In addition, the stock has a spectacular dividend-paying record. PFE has paid dividends for 33 consecutive years. Its dividend payouts have increased at a 5.7% CAGR over the past five years. Its current dividend yield is 3.09%, and its four-year average yield is 3.63%.
Here is what could shape PFE’s performance in the near term:
Solid Bottom Line
For its third quarter that ended October 2, 2022, PFE’s United States segment revenues came in at $13.85 billion, up 97.3% year-over-year.
Its non-GAAP net income came in at $10.17 billion, up 39.7% year-over-year. Its non-GAAP EPS came in at $1.78, up 40.2% year-over-year. Moreover, its income from continuing operations came in at $8.64 billion, up 5.8% year-over-year.
Attractive Valuations
PFE’s forward EV/Sales of 2.91x is 26% lower than the industry average of 3.94x. Its forward EV/EBITDA of 6.57x is 51.2% lower than the industry average of 13.45x. Also, its forward Price/Sales of 2.90x is 33.9% lower than the industry average of 4.38x, while its trailing-12-month Price/Cash Flow of 10.93x is 38.5% lower than the industry average of 17.76x.
Robust Profitability
PFE’s trailing-12-month gross profit margin of 66.17% is 19.7% higher than the industry average of 55.29%. Its trailing-12-month EBITDA margin of 44.81% is substantially higher than the industry average of 3.73%, and its trailing-12-month net income margin of 29.81% is higher than the negative industry average of 5.94%.
In addition, its trailing-12-month ROCE, ROTC, and ROTA of 35.59%, 20.30%, and 15.24% compared with the negative industry averages of 39.56%, 21.95%, and 31.20%, respectively.
POWR Ratings Reflect Promising Outlook
PFE has an overall rating of A, which equates to a Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PFE has an A grade for Value, consistent with its lower-than-industry valuation multiples.
It has a B grade for Growth and Quality, in sync with its solid bottom line in the latest reported quarter and higher-than-industry profitability margins, respectively.
In the 160-stock Medical – Pharmaceuticals industry, PFE is ranked #2.
Click here for the additional POWR Ratings for PFE (Momentum, Stability, Sentiment).
View all the top stocks in the Medical – Pharmaceuticals industry here.
Bottom Line
Despite widespread macro headwinds, PFE registered solid bottom-line growth in its latest quarter. Moreover, analysts expect PFE’s revenue and EPS to increase 23.3% year-over-year and 46.4% year-over-year to $100.26 billion and $6.47 in the year ending December 2022.
Given PFE’s solid fundamentals, I think PFE might be an ideal addition to your portfolio amid the uncertainties ahead.
How Does Pfizer Inc. (PFE) Stack up Against Its Peers?
While PFE has an overall POWR Rating of A, one might consider looking at its industry peers, Novo Nordisk A/S (NVO), Bristol-Myers Squibb Company (BMY), and Johnson & Johnson (JNJ), which have an overall A (Strong Buy) rating.
PFE shares were trading at $51.93 per share on Friday morning, up $0.15 (+0.29%). Year-to-date, PFE has declined -9.20%, versus a -15.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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