Do you have an interest in knowing more about Pfizer stock? Stick around.
Among the largest biopharmaceutical companies, New York-based Pfizer continues to grab headlines on the monumental development of its successful Covid vaccine, now called Comirnaty, with BioNTech.
The Pfizer shares had a strong performance, rising 60.42% in 2021 on the approval and contribution of the Covid vaccines. The stock is down 8.36% year-to-date.
Before purchasing their shares, you should understand the company, its fundamentals, and what investors consider when looking at the stock.
An Overview of The Company And Its Fundamentals
Pfizer started as a manufacturer of fine chemicals by German cousins Charles Pfizer and Charles Earhart in 1849 in Brooklyn. They discovered citric acid, the ingredient in Coca-Cola and Pepsi.
Led by Chairman and CEO Albert Bourla, PhD., Pfizer is a focused, innovative research-based global biopharma company, manufacturing more than 350 different pharmaceuticals, including:
- Eliquis, cardiovascular treatment
- Ibrance, cancer drug
- Zeljanx, immunology drug
They specialize in vaccines, cancer, heart, and diabetes pharmaceuticals for their robust portfolio.
It generates solid revenue and earnings growth through its strong drug pipeline, research, and innovation.
Pfizer works across markets to develop wellness, prevention, treatments, and cures, providing access to healthcare through collaboration with governments, corporate partners, healthcare providers, and local communities.
Pfizer was first to receive an Emergency Use Authorization from the FDA for its Covid vaccine in late 2020. It received its full FDA approval in August 2021 for the Comirnaty vaccine. The vaccine contributed 35%-40% of Pfizer’s revenues to date and will likely remain strong as it rolls out its vaccine to children of 5-11 years and in pill form later in 2022.
A blockbuster drug generates at least $1 billion in sales. Typically, that sort of revenue concentration may concern investors. Still, the company has several blockbuster drugs with an innovative biopharma pipeline at various development stages that looks promising for the future.
When a biopharma company like Pfizer develops the drug, they hold a patent for 20 years, exclusively manufacturing it. Upon patent expiration, the drug can be made by other companies, becoming a generic drug. Pfizer’s cholesterol-lowering Lipitor expired in 2011, yet the company still generates billions in revenue.
The company raised full-year 2021 guidance when it released its third-quarter 2021 results, reaffirming the projected revenue compound annual growth rate (CAGR) of at least 6% revenue growth and double-digit growth EPS growth.
Pfizer Stock Characteristics
Are Pfizer (PFE) shares appropriate for your portfolio? We will provide you with some of the investing attributes as of January 18, 2022, from Yahoo Finance:
- Market Capitalization: $303.6 Billion
- Average Volume: 43,340,212
- Trailing P/E Ratio (TTM): 15.45
- Forward P/E Ratio: 11.07
- 52 Week H/L Range: $33.36-$61.71
- Dividend Yield: 2.96%
- Beta: 0.64
Pfizer (PFE) is considered a large-cap stock with a market capitalization of over $300 billion and is included in the S&P 500 index and the S&P Healthcare sector. You can calculate the market capitalization by multiplying its stock price by the number of shares outstanding.
The average volume measures how many PFE shares trade on average and reflects the stock’s liquidity. At 43.3 million shares trading daily, there is no liquidity issue.
The price-earnings or PE ratio is the current market price divided by the company’s earnings per share or EPS. This ratio is the primary benchmark of valuing a stock, demonstrating how expensive the shares are relative to the company’s profits. You can compare the PE multiple to its historical ratio, respective sector, and the S&P 500 market proxy.
The trailing PE ratio measures the current price to the last twelve months (i.e., TTM) reported earnings or historical earnings. The forward or projected PE ratio divides the stock price by earnings estimates, often provided by analysts who follow the stock.
Pfizer generates earnings consistently. Investors should examine PFE’s multiple relative to comparable healthcare companies and the S&P 500 index. A low or high PE multiple may indicate a cheap or expensive stock. Several valuation methods may be more suitable for companies not yet producing consistent earnings.
Pfizer’s dividend yield is the annual cash dividend paid of $1.60 per share to an investor as a percentage of its current market price, or 2.96%. This yield is above average compared to the S&P 500’s rate.
Pfizer has a strong dividend track record, with 12 consecutive years of dividend increases.
The beta value measures the volatility of a particular stock relative to the overall market. For large-cap stocks like PFE, the S&P 500 serves as the best benchmark and has a beta of 1.0. If a stock had a beta of 1, it would move in lockstep with the market. PFE’s beta of 0.64 indicates lower than market volatility.
Comparable Peers To Pfizer
Just as real estate agents and their clients will look at comparable (“comps”) homes to help them judge the prospective home they may buy, so should investors when buying into a specific sector, like healthcare. The comparable peers that serve as Pfizer’s are:
- Abbvie (ABBV)
- Bristol Myers (BMY)
- Eli Lilly (LLY)
- Johnson & Johnson (JNJ)
- Merck (MRK
- Novartis (NVS)
- Roche Holding (RHHBY)
Where Does PFE Stock Belong In Your Portfolio? Pulling It Together
Investors consider PFE as a large-cap income stock based on its size and dividend track record and often listed as a blue-chip for its long well-regarded reputation. With its steady growth and low valuation relative to its fundamentals, PFE shares are more of a value play than a growth stock better reflected by the tech sector.
You can buy Pfizer stock individually, adding to your diversified portfolio, or as part of mutual funds or ETFs that provide diversification. Many mutual funds, including passively managed low-cost index funds that track the S&P 500 market or the healthcare sector, hold PFE shares.
What Are The Catalysts For Pfizer Stock
When buying a stock, you should know about the company, its fundamentals, and potential catalysts to provide the shares with upside or downside movement. A catalyst is an event or new information like a trigger that can quickly cause a change or action. A positive or negative catalyst can move the share price significantly up or down in the stock market.
So what can pop up for the PFE shares? Here is a list that is by no means exhaustive:
Earnings Surprises. Its next earnings report for the fourth quarter is February 8th. Pfizer management provided raised guidance for full-year 2021 revenues of $81B-$82B, including Comirnaty (or $45B-$46B excluding those revenues). Pfizer’s full-year 2021 guidance was for EPS of $2.60-$2.65. Revenue and earnings surprises can go either way, and cause analysts to maintain their 2022 estimates or raise or lower next year’s forecasts.
Pipeline Milestones or Disappointments. Pfizer has a solid track record of achieving milestones. They have several clinical trials at varying phases that are promising. Progress or setback can be catalysts.
Vaccine Effectiveness. The ongoing effectiveness of its products is essential, especially the Covid-19 vaccine for young children and the pill later in 2022.
Duration of Covid Products. The covid vaccine contributed 35%-40% of Pfizer’s revenues, and investors wonder about its future contribution to Pfizer and duration. Should Covid disappear (that would be a great event!) but could it negatively impact long-term holders?
Valuable Deals. Pfizer’s ability to continue to forge valuable deals and partnerships in the US and abroad.
Dividend Increases. Investors rely on the company’s strong dividend track record, anticipating dividend growth annually. A change in its dividend policy could be disappointing.
Our review of Pfizer stock should be the start of your research before purchasing the shares. You should follow our investing rules for success.
Investing in stocks is the best path to building wealth. Solid companies don’t always make good stocks and vice versa. Before investing, you should have fully-funded emergency savings account in place and your debt at manageable levels.
As an affiliate, I’ve partnered with TradingView to bring you their unique stock screener that helps filter the best and most profitable trading opportunities. Get a free trial and access their charting platform with market-leading features.
Tim Thomas has positions in the stocks, ETFs or commodities mentioned.
Featured Image Credit: Unsplash