© Reuters
Pharmaceutical giant Pfizer (NYSE:), currently valued at $186.99 billion according to InvestingPro, is undergoing a major transition, moving from COVID-19 vaccines to a more diversified portfolio of medicines, following the government’s decision to stop stockpiling vaccines and the imminent expiration of patents on multiple drugs.
Pfizer, which saw significant revenue growth during the pandemic thanks to its COVID-19 vaccine, is now facing a potential decline in demand. The company predicts that the COVID-19 vaccination rate in the US will be only 24% this year, and expects this rate to continue to decline as the virus becomes less of a concern.
Pfizer’s revenue in the first half of this year was down 42% year-on-year, largely due to falling sales of the COVID-19 vaccine.
The company is also preparing for the expiration of patent protection for some of its key drugs this decade, including blood-thinning drug Eliquis. To counter these challenges, Pfizer CEO Albert Bourla has outlined plans to add $25 billion in new revenue before the end of the decade.
As part of this strategy, Pfizer plans to acquire cancer company Seagen for $43 billion and has already completed several smaller acquisitions in recent years. The company is also developing a weight loss drug, danuglipron, which has so far shown promising results.
Currently, Pfizer shares trade at a steep discount – just 10 times its estimated future earnings – compared to an average multiple for healthcare stocks of 18 times. This suggests that investors may be overly bearish on the stock. According to InvestingPro, Pfizer has a P/E of 8.67, which corroborates this statement.
InvestingPro Tips suggests that Pfizer operates at a high return on assets and pays a significant dividend to shareholders, which could be attractive to investors looking for stable returns. The company’s dividend yield is 5.11% as of the second half of 2023, and it has been increasing its dividend for 12 consecutive years.
Investing in a company undergoing such a big transition can be risky. However, Pfizer is taking steps to diversify its operations and invest in growth through both its pipeline and acquisitions.
Therefore, if investors are willing to buy and hold as the company evolves, the stock could offer significant long-term returns. For more information like this, check out InvestingPro, which offers additional advice and real-time metrics for companies like Pfizer. You will find more information at InvestingPro Pricing.
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2023-09-29 20:19:14
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