The past three years have been disappointing for Pfizer (NYSE:PFE): The drugmaker’s revenues, profits and stock prices have generally moved in the wrong direction. It wasn’t all bad, though: Pfizer has made some progress on the clinical and regulatory fronts with several brand new approvals.
And now the company’s financial results are improving. Let’s take a look at Pfizer’s latest quarterly update and decide if the stock is worth investing in today.
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Pfizer’s earnings went south as coronavirus-related revenues fell off a cliff. That was good news for everyone else – it was a sign of a waning pandemic. However, COVID-19 is here to stay, and in the third quarter, Pfizer’s sales in this market helped turn things around.
Revenues reached $17.7 billion, up 31% year-over-year, which is more than excellent for a pharmaceutical giant. The coronavirus drug Paxlovid contributed $2.7 billion to sales, up from just $202 million in the third quarter of 2023. Comirnaty, Pfizer’s famed vaccine, saw sales grow 9% year over year to $1.4 billion .
While Pfizer’s acquisition of Seagen in December 2023 also played a role, this quarter once again highlights the continued importance of Pfizer’s work on COVID-19. In fact, the drugmaker has raised its fiscal 2024 revenue and earnings per share (EPS) expectations in anticipation of better sales of these products.
In announcing its second-quarter results, Pfizer said it expected revenue in the range of $59.5 billion to $62.5 billion and adjusted earnings per share of $2.45 to $2.65. Those were also upward revisions. Now the company expects revenue between $61 billion and $64 billion and earnings per share between $2.75 and $2.95.
Pfizer’s revenue from its coronavirus portfolio will be somewhat cyclical; In autumn and winter, people are more likely to be vaccinated. However, the company’s prospects extend far beyond this one product line. It has an extensive portfolio and deep pipeline with more than 100 programs.
Like many other drug developers, Pfizer hopes to carve out a niche in the weight loss field. Management has said the oral obesity drug could be the second drug of its kind to hit the market. There is a need for oral solutions because the current leaders in this field, including Wegovy and Zepbound, are administered via weekly injections.
Many patients would prefer a daily oral pill, and that’s what Pfizer is working on. One of the company’s candidates, danugliprone, is in phase 2 trials. It has several other candidates in early-stage trials. The weight loss market is expected to skyrocket in the coming years, potentially crossing the $150 billion mark by the early 2030s.
Other significant opportunities are likely to arise from Pfizer’s work in oncology, which the company plans to expand following its acquisition of Seagen. Pfizer’s goal was to become a leader in oncology, one of the largest therapeutic areas in the industry. Seagen was already an impressive player in this niche, but with the support of its new parent company, it could become even bigger.
Pfizer’s recovery won’t happen overnight, but the company has already laid the foundation for future success. The investments the company has made in its pipeline, the major acquisitions it has made thanks to the coronavirus windfall, and the divestiture of a number of segments that were a deadweight impact on the bottom line, will slowly pay off.
Plus, Pfizer is a decent income stock: its forward yield is currently 5.9% and its payouts are up over 61% over the past decade. Dividend seekers focused on the long game can safely invest in this company.
Consider the following before buying shares in Pfizer:
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool has a disclosure policy.
This beaten-down stock gave investors even more good news: Is it a buy? was originally published by The Motley Fool
