Interested in learning more about Pfizer stock? Hang around.
Among the biggest biopharmaceutical companies, New York-based Pfizer continues to draw attention to the monumental development of its successful Covid vaccine, now called Comirnaty, with BioNTech.
Pfizer shares performed well, rising 60.42% in 2021 thanks to the approval and contribution of Covid vaccines. Shares are down 8.36% year-to-date.
Before you buy their stock, you need to understand the company, its core principles, and what investors consider when looking at stocks.
Overview of the company and its foundations
Pfizer began as a manufacturer of fine chemicals by German cousins Charles Pfizer and Charles Ehrhart in 1849 in Brooklyn. They discovered citric acid, an ingredient in Coca-Cola and Pepsi.
Led by Chairman and CEO Albert Burla, Ph.D., Pfizer is a focused, innovative, research-based global biopharmaceutical company with more than 350 different pharmaceutical products, including:
- Eliquis, treatment of cardiovascular diseases
- Ibrance, the cure for cancer
- Zeljanx, an immunological drug
They specialize in vaccines, cancer, heart and diabetes drugs thanks to their robust portfolio.
The company delivers solid revenue and profit growth through a strong drug portfolio, research and innovation.
Pfizer works across markets to advance health, prevention, care and treatment, providing access to healthcare through collaboration with governments, corporate partners, healthcare providers and local communities.
Pfizer was the first to receive emergency use clearance from the FDA for its Covid vaccine at the end of 2020. In August 2021, she received full FDA clearance for the Comirnaty vaccine. To date, the vaccine has generated 35-40% of Pfizer’s revenue and is likely to remain strong as the company launches a vaccine for children ages 5-11 and in tablet form later in 2022.
The blockbuster drug generates at least $1 billion in sales. Typically, this kind of income concentration can be a concern for investors. However, the company has several blockbuster drugs with an innovative biopharmaceutical portfolio in various stages of development that look promising for the future.
When a biopharmaceutical company like Pfizer develops a drug, they have a patent for 20 years, exclusively manufacturing it. After the patent expires, the drug can be produced by other companies, becoming a generic drug. Pfizer’s cholesterol-lowering drug Lipitor expired in 2011, but the company is still generating billions in revenue.
The company raised its full-year guidance for 2021 when it released its third-quarter 2021 results, reaffirming a projected compound annual growth rate (CAGR) of at least 6% revenue growth and double-digit earnings-per-share growth.
Characteristics of Pfizer shares
Is Pfizer (PFE) stock a good fit for your portfolio? We will provide you with some investment attributes as of January 18, 2022 from Yahoo Finance:
- Market capitalization: $303.6 billion.
- Average volume: 43 340 212
- Trailing P/E (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 company 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 market capitalization by multiplying the share price by the number of shares outstanding.
Average Volume measures how many PFE shares are traded on average and reflects the liquidity of the shares. With 43.3 million shares traded daily, there are no liquidity issues.
Value for Money
The price-to-earnings ratio or PE is the ratio of the current market price to the company’s earnings per share or EPS. This ratio is the main criterion for evaluating a stock, showing how expensive a stock is in relation to the company’s earnings. You can compare the PE multiple with its historical multiple, the corresponding sector, and the S&P 500 market proxy.
The PE rolling ratio measures the current price compared to the last twelve months reported earnings (i.e. TTM) or historical earnings. The forward or forecast PE ratio divides a stock’s price by the earnings estimate often provided by analysts who follow stocks.
Pfizer is consistently profitable. Investors should study the PFE multiple against peers in healthcare and the S&P 500. A low or high PE multiple can indicate a cheap or expensive stock. Several valuation methods may be more appropriate for companies not yet making consistent profits.
Pfizer’s dividend yield is an annual cash dividend paid to an investor of $1.60 per share as a percentage of its current market price, or 2.96%. This return is above average compared to the S&P 500 rate.
Pfizer has a solid dividend track record with 12 straight dividend increases.
The beta value measures the volatility of a particular stock in relation to the market as a whole. 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 with the market. A PFE beta of 0.64 indicates lower than market volatility.
Comparable peers with Pfizer
Just as real estate agents and their clients will look at comparable homes (“comps”) to help them evaluate a potential home they could buy, so should investors when buying in a particular sector such as healthcare. Comparable counterparts that serve Pfizer:
Bristol Myers (BMY)
Eli Lilly (LLY)
Johnson & Johnson (JNJ)
Roche Holding (RHHBY)
Where do PFE stocks fit in your portfolio? Let’s get together
Investors view PFE as a large-cap income stock based on its size and dividend track record, and are often referred to as blue chips due to its long-standing respected reputation. With solid gains and a low valuation relative to fundamentals, PFE shares are more of a value game than growth stocks better reflected by the tech sector.
You can buy Pfizer stock individually to complement your diversified portfolio, or as part of a diversified mutual fund or ETF. Many mutual funds, including low-cost, passively managed index funds that track the S&P 500 market or the healthcare sector, hold PFE stock.
What are the catalysts for Pfizer shares
When buying a stock, you should be aware of the company, its underlying principles, and the potential catalysts that move the stock up or down. A catalyst is an event or new information, such as a trigger, that can quickly trigger a change or action. A positive or negative catalyst can significantly increase or decrease the price of a stock in the stock market.
So what could come up for PFE stock? Here is a list that is by no means exhaustive:
Earning Surprises. The next fourth quarter earnings report is February 8th. Pfizer management has provided an increased 2021 revenue guidance of $81-82 billion including Comirnaty (or $45-46 billion excluding those revenues). Pfizer’s forecast for all of 2021 was $2.60-$2.65 per share. Surprises in revenue and earnings could come anyway and force analysts to keep their estimates for 2022 or up or down their forecasts for next year.
Conveyor milestones or disappointments. Pfizer has a solid track record of accomplishments. They have several promising clinical trials in different phases. Progress or failure can be catalysts.
Vaccine effectiveness. The continued effectiveness of its products is essential, especially the Covid-19 vaccine for young children and the pills coming later in 2022.
Validity period of Covid products. The Covid vaccine generated 35-40% of Pfizer’s revenue, and investors are wondering about its future contribution to Pfizer and duration. Should Covid disappear (that would be a great thing!) but could it negatively impact long-term holders?
Valuable offers. Pfizer’s ability to continue to close valuable deals and partnerships in the US and abroad.
Dividends are increasing. Investors rely on the company’s good reputation for dividends, expecting annual dividend growth. The change in dividend policy can be disappointing.
Our review of Pfizer stock should be the start of your research before buying stock. You must follow our investment rules to be successful.
Investing in stocks is the best way to get rich. Well-established companies do not always have good stocks, and vice versa. Before investing, you must have a fully funded emergency savings account and your debt at a manageable level.
This post was originally prepared Geek Wealth