If you had bought for € 1,000 Pfizer (NYSE:PFE) shares five years ago, how much would that be worth today? The answer will seem great or terrible to you: $840.
That answer will be terrible if you did then buy into Pfizer as this reflects a loss and not a gain – of about 16% – yep! On an annual basis, that is an average loss of 3.4% per year. The loss is even greater if you did what we often recommend: reinvesting your dividends in additional shares. If you had poured Pfizer’s not-insignificant dividends into more Pfizer shares, your total loss would have been 21%, leaving you with about $790. Ouch. (Note that you can of course always reinvest dividend income in shares of each stocks, like the ones you’re most optimistic about.)
Meanwhile, that answer – a loss of 16% or 21% – could be great if you didn’t buy Pfizer in 2019 but want to do so now. That’s because, after such a decline, the stock now looks quite attractively valued. For example, the recent price-to-sales ratio was 2.5, well below the five-year average of 3.4. Furthermore, Pfizer is a dividend-paying stock, with a whopping recent dividend yield of 6.5%.
The shares have sunk in part because demand for Pfizer’s Covid-19 vaccines and Paxlovid drug has fallen, and also because some of its big sellers, such as Eliquis, Ibrance, Inlyta, Xeljanz, Xtandi and Vyndaqel, no longer have patent protection to have. the coming years.
But Pfizer, like any good pharmaceutical company, is always working on the next big sellers. It has boosted its cancer-fighting game with the acquisition of Seagen, whose cancer treatments could help fuel growth. And Pfizer’s total pipeline recently included more than 110 drugs and vaccines in development, some of which could prove to be tomorrow’s blockbusters.
More important than how Pfizer has done in the past is how it will perform in the future. Whether you already own it or are thinking about buying it, you want to be sure that it will be bigger and stronger in the future.
Should you invest €1,000 in Pfizer now?
Consider the following before buying shares in Pfizer:
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Selena Maranjian has no positions in any of the stocks mentioned. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool has a disclosure policy.
If you had invested $1,000 in Pfizer five years ago, this is how much you would have today. originally published by The Motley Fool
