Examining Pfizer's Position After COVID-19 Vaccine Revenue Windfall

The drug maker Pfizer experienced a significant surge in growth due to its COVID-19 vaccine, which brought in billions in additional sales. However, this boost in revenue was short-lived, and the company's financial status has seemingly reverted to where it was prior to the pandemic, with its stock now at its lowest since the market downturn instigated by COVID in 2020. Investors are now questioning whether Pfizer’s stock is a good investment, especially after its major $43 billion acquisition.

Revisiting Pandemic Lows

In 2022, Pfizer's revenue hit an all-time high, crossing $100 billion, with a significant portion, approximately $56.7 billion, contributed by its COVID-19 products, Comirnaty (vaccine) and Paxlovid (treatment). However, as the pandemic subsides, these revenues are diminishing. Recent data reflects a return to pre-pandemic financial levels, with expectations for continued decline. For the upcoming year, Pfizer forecasts sales ranging from $58.5 billion to $61.5 billion, and earnings per share anticipated to be between $2.05 and $2.25, inclusive of contributions from their recent acquisition, Seagen.

Future Prospects

After a turbulent period due to the pandemic, Pfizer is strategizing its recovery, aiming to cut costs by $3.5 billion annually. Even though its COVID-19 related business has significantly decreased, its other segments are showing growth. The acquisition of Seagen, which specializes in cancer therapy, is another step to bolster Pfizer’s portfolio. For 2024, the company is aiming for a revenue increase of 3% to 5% excluding COVID-19 and Seagen products, with the addition of Seagen expected to push growth between 8% and 10%. Nevertheless, the impact of Seagen on earnings could be ambiguous until 2027 or 2028.

The Verdict on Pfizer Stock

Analysts are cautious, predicting a slight decline in long-term earnings, which may affect investor sentiment. Valuation-wise, Pfizer’s P/E ratio is expected to be 14 by 2024. The company's financial situation is further strained by a $63 billion debt incurred from the Seagen deal, accompanied by a dividend payout that has exceeded the cash flow. Despite a recent dividend hike, this indicates a tight financial situation. Investors considering buying into Pfizer must weigh this opportunity against others in the pharmaceutical industry, which might offer more attractive investment options.

Pfizer, Stocks, Investment