Pfizer Inc. (PFE) develops, manufactures, markets, and sells biopharmaceutical products worldwide. The company provides medicines and vaccines in various therapeutic areas, including cardiovascular metabolic and women’s health; biologics, immunotherapies, and biosimilars; pneumococcal disease; tick-borne encephalitis; and COVID-19.

The pharmaceutical giant delivered impressive performance in its last quarter, with solid revenue and earnings growth driven by different therapeutic areas and its COVID-19 franchises.

This month, PFE announced that its investigational Group B Streptococcus (GBS) vaccine candidate, GBS6 or PF-06760805, received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for the prevention of invasive GBS disease in infants via active immunization of their mothers during pregnancy.

On August 31, 2022, PFE and BioNTech SE (BNTX) granted FDA Emergency Use Authorization of omicron BA.4/BA.5 - adapted bivalent COVID-19 vaccine booster for ages 12 years and older. “We are thrilled by today's news, another important milestone in our ongoing efforts to protect against this virus,” said Albert Bourla, PFE’s Chairman and CEO.

On August 8, 2022, PFE announced the acquisition of Global Blood Therapeutics, Inc. (GBT), a biopharmaceutical company involved in discovering, developing, and delivering life-changing treatments, starting with sickle cell disease (SCD). The acquisition enhances PFE’s more than 30-year heritage in rare hematology and reinforces its commitment to SCD by bringing expertise and a leading portfolio and pipeline.

Furthermore, the company is known for paying attractive dividends. It pays $1.60 as dividends annually, yielding 3.46% on the current price. Its four-year average yield is 3.60%. Its dividend payouts have grown at a 5.7% CAGR over the past three years and a 5.9% CAGR over the past five years. PFE’s dividends have increased for 11 consecutive years.

PFE’s shares have gained 3.2% over the past year to close the last trading session at $46.15. Also, Wall Street analysts expect the stock to hit $56.20 in the near term, representing a 21.8% upside potential.

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

Solid Financials

In the second quarter of fiscal 2022, PFE’s revenues increased 46.8% year-over-year to $27.74 billion. The company’s revenue from vaccines came in at $10.46 billion, up 13.4% year-over-year. Its adjusted income rose 93.5% from the year-ago value to $11.66 billion, and its adjusted EPS came in at $2.04, up 92.5% year-over-year.

Favorable Analyst Estimates

Analysts expect PFE’s revenue for the fiscal 2022 fourth quarter (ending December 2022) to come in at $24.79 billion, indicating an increase of 4% from the prior-year period. The consensus EPS estimate of $1.35 for the same period suggests a 25.3% year-over-year increase. Also, the company has topped the consensus EPS estimates in each of the trailing four quarters.

In addition, the company’s revenue and EPS for the current fiscal year 2022 (ending December 2022) are expected to rise 25.2% and 46.9% from the previous year to $101.74 billion and $6.49, respectively.

Discounted Valuations

In terms of forward non-GAAP P/E, PFE is currently trading at 7.11x, 62.3% lower than the industry average of 18.84x. The stock’s forward EV/Sales multiple of 2.71 is 36.6% lower than the industry average of 4.27. Its forward EV/EBITDA of 5.96x is 55.9% lower than the industry average of 13.52x.

Furthermore, the stock’s forward EV/EBIT of 6.67x is 61.2% lower than the industry average of 17.16x. Its forward Price/Sales of 2.55x is 44.8% lower than the industry average of 4.61x. Also, its forward Price/Cash Flow multiple of 6.90 is 57.9% lower than the industry average of 16.40.

Robust Profit Margins

PFE’s trailing-12-month gross profit margin of 62.75% is 15.5% higher than the 54.31% industry average. Its trailing-12-month EBIT margin of 38.05% is 5,749.5% higher than the industry average of 0.65%. Also, the stock’s trailing-12-month EBITDA margin of 42.97% is 863.4% higher than the 4.46% industry average.

Also, PFE’s trailing-12-month levered FCF margin of 28.69% compares to the industry average of negative 3.01%. The stock’s trailing-12-month ROCE, ROTC, and ROTA of 37.50%, 20.28%, and 15.01% are higher than the industry averages of negative 38.50%, 21.38%, and 29.73%, respectively.

POWR Ratings Show Promise

PFE's overall A rating equates 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 a grade of A for Value, in sync with its lower-than-industry valuation metrics. In addition, it has a B grade for Sentiment, consistent with its solid revenue and earnings growth estimates.

PFE is ranked #8 out of 167 stocks in the Medical Pharmaceuticals industry.

Beyond what I have stated above, we have also given PFE grades for Quality, Growth, Momentum, and Stability. Get access to all PFE ratings here.

Bottom Line

Pharmaceutical company PFE performed well throughout the pandemic and still has more room for growth. The company reported strong financial results in the second quarter of fiscal 2022. Moreover, its business acquisitions, FDA approvals for its products, and other strategic initiatives demonstrate solid growth prospects.

Given its robust financials, solid revenue and earnings growth prospects, attractive dividends, lower-than-industry valuations, and high profitability, we think adding this stock to your portfolio could be wise now.

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-Pharmaceutical industry with an A (Strong Buy) rating: Johnson & Johnson (JNJ), Novartis AG (NVS), and AbbVie Inc. (ABBV).

PFE shares rose $0.09 (+0.20%) in premarket trading Thursday. Year-to-date, PFE has declined -19.99%, versus a -16.30% 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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