Despite the economic headwinds, Pfizer Inc. (PFE) reported impressive financials for the third quarter of 2022 and updated its full-year financial outlook. It raised the lower end of full-year 2022 revenue guidance to a range of $99.5 to $102 billion. 

It increased 2022 revenue guidance for Comirnaty by $2 billion to approximately $34 billion and reaffirmed revenue guidance for Paxlovid of nearly $22 billion. In addition, PFE expects an adjusted EPS of $6.40 to $6.50, up from the prior guidance of $6.30 to $6.45.

The company is relentlessly pursuing scientific breakthroughs and innovative medicines for patients. “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, Chairman and CEO.

Furthermore, PFE is known for delivering attractive and consistent returns to shareholders through dividends. On September 22, PFE announced a cash dividend of $0.40 per common stock for the fourth quarter, payable on December 5, 2022. Its current annual dividend of $1.60 yields 3.38%, while its four-year average dividend yield is 3.62%.

Moreover, PFE’s dividend payouts have grown at CAGRs of 5.5% and 5.7% over the past three and five years, respectively. The company has raised its dividend for 12 consecutive years.

Shares of PFE have gained 12.2% over the past month to close the last trading session at $47.38.

Here is what could influence PFE’s performance in the upcoming months:

Favorable Recent Developments

On November 3, PFE’s investigational cancer immunotherapy, elranatamab, received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for treating people with relapsed or refractory multiple myeloma (RRMM). This marks a significant milestone for the company.

On October 5, PFE announced the completion of the Global Blood Therapeutics, Inc. (GBT) acquisition. The acquisition reinforces Pfizer’s commitment to sickle cell disease (SCD) and brings a leading SCD portfolio and pipeline with the potential to address critical needs in an underserved patient community.

In addition, on October 3, PFE completed the acquisition of Biohaven Pharmaceutical Holding Company Ltd., the maker of NURTEC® ODT (rimegepant). This acquisition adds an innovative migraine therapy approved for both acute treatment and prevention of episodic migraine in adults.

Solid 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. Its non-GAAP net income attributable to PFE common shareholders grew 39.7% from the year-ago value to $10.17 billion. 

Also, 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 $264.75 billion, indicating an increase of 16.8% from the prior-year period. The consensus EPS estimate of $10.95 for the ongoing quarter indicates an increase of 6.6% year-over-year. Also, the company has topped the consensus EPS estimates in three of the trailing four quarters, which is impressive.

In addition, the company’s revenue and EPS for the current fiscal year (ending December 2022) are expected to increase 39.9% and 65.1% from the previous year to $1.08 trillion and $69.40, respectively. Also, Street expects its EPS to grow 129% per annum for the next five years.

High Profitability

PFE’s trailing-12-month gross profit margin of 65.69% is 20.9% higher than the 54.31% industry average. Its trailing-12-month EBITDA margin of 44.29% is 1,354.5% higher than the 3.04% industry average. Also, the stock’s trailing-12-month net income margin of 29.81% compares to the industry average of negative 4.30%.

Moreover, PFE’s trailing-12-month levered FCF margin of 28.69% compares to the industry average of negative 2.63%. Likewise, its trailing-12-month ROCE, ROTC, and ROTA of 36.77%, 20.21%, and 15.24% compare to the industry averages of negative 39.69%, 21.82%, and 30.62%, respectively.

Discounted Valuation

In terms of forward non-GAAP P/E, PFE is currently trading at 7.25x, 59.87% lower than the industry average of 18.08x. The stock’s forward EV/EBITDA multiple of 6.05 is 53% lower than the industry average of 12.87. In addition, its forward EV/EBIT multiple of 6.65 compares with an industry average of 16.43.

Furthermore, in terms of forward Price/Sales, PFE is currently trading at 2.62x, 36.5% lower than the industry average of 4.13x. Its forward Price/Cash Flow of 5.88x is 64.2% lower than the industry average of 16.40x.

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 multiples. In addition, the stock has a B grade for Quality, in sync with its higher-than-industry profitability metrics.

PFE is ranked #5 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’s revenue and net income increased at 23.5% and 22.5% CAGRs over the past three years. Also, its EPS has grown at a CAGR of 22.7% over the same time frame. Given its continued business momentum driven by strategic breakthroughs, acquisitions, and drug approvals, the company has raised its 2022 financial guidance for revenues and adjusted EPS by nearly $1.7 billion and $0.19, respectively.

Given its solid financials, improved profitability, discounted valuation, reliable dividends, and promising growth prospects, we think it could be wise to add the stock to your retirement portfolio.

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: Roche Holding AG ADR (RHHBY), Novo Nordisk A/S ADR (NVO), and Neurocrine Biosciences, Inc. (NBIX).

PFE shares were unchanged in premarket trading Friday. Year-to-date, PFE has declined -17.16%, versus a -15.94% rise in the benchmark S&P 500 index during the same period.

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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