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Down 32% in a Year, Should Investors Buy the Dip in Pfizer Stock?

Barchart - Fri Apr 5, 7:41AM CDT

Pfizer (PFE) is large-cap pharmaceutical company headquartered in Manhattan. It offers treatment drugs for conditions such as cardiovascular, pain and metabolism, cancer, inflammation, women’s health, rare diseases, and more. Selling their products from wholesalers, retailers, hospitals, government clinics, and pharmacies, PFE operates globally, with a market cap of $150.9 billion.

While many other pharma stocks have been notching impressive gains lately, that's not the case for Pfizer. PFE stock is down 34.8% in the last 52 weeks, including a decline of more than 7% in 2024. The stock is trading near its 52-week low of $25.61, set in early March.

Pfizer Reports Mixed Earnings

Pfizer posted its full-year 2023 and Q4 results in late January, with revenue of $14.25 billion falling short of analysts' expectations for $14.36 billion. Adjusted earnings came in at $0.10 per share, however, outperforming Wall Street’s forecast for a per-share loss of $0.19.

During the quarter, Pfizer booked a roughly $3.5 billion revenue reversal from the U.S. government on the return of unused doses of its COVID-19 treatment drug, Paxlovid - which was lower than the anticipated $4.2 billion figure. However, revenue from products like Ibrance, used for breast cancer treatment, and the Prevnar pneumonia vaccine also came in lighter than expected. Revenue from Prevnar was $1.61 billion, lower than the estimated $2 billion, on lower demand and “unfavorable timing of customer orders.” 

As for FY2024, the company says it anticipates earnings in the range of $2.05 to $2.25 per share, with anticipated revenue of $58.5 billion to $61.5 billion. 

Is PFE Stock a Buy?

One key driver of growth lately for other top pharma companies, chiefly Novo Nordisk (NVO) and Eli Lilly (LLY), has been the launch of GLP-1 weight-loss drugs - and that's where PFE is falling behind, according to a new note from investment research firm Argus. In late March, the analysts downgraded the stock to a “Hold,” citing concerns over the company's decrease in topline growth (from 7% in 2023 to a projected 3%-5% for FY2024), along with recent setbacks in its twice-daily GLP-1 formulation.

As a result, Argus said, “PFE will be focused on developing the once-daily formulation with pharmacokinetics results due in 2024, but it will be behind Lilly’s Zepbound and Novo Nordisk’s Wegovy in the market for weight-loss therapies.” 

Pfizer has a consensus “Moderate Buy” from analysts overall, with the mean price target of $35.74 reflecting an upside potential of 34.1% from Thursday's close. Out of the 20 analysts following the stock, 8 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 11 have a “Hold” rating on the stock.

While Pfizer stock has significantly underperformed, investors who are seeking out bargains in the relatively recession-proof pharma space might want to keep an eye on the shares this April. PFE offers a dividend yield of 6.3%, and is priced at 2.52x forward sales and 12.03x forward EPS - quite a bit cheaper than its GLP-1 rivals, LLY and NVO. 

On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.

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