Pfizer | Fundamental Analysis | MUST READ | LONG 🔔Historically, Pfizer has not had much momentum when it comes to stock performance. Over the past ten years, the S&P 500 Index has outperformed this large pharmaceutical company. But now Pfizer is gaining momentum. Last year it outperformed the benchmark index - Pfizer was up 60%, while the S&P 500 was up 27%.
And today's Pfizer doesn't look much like Pfizer did a few years ago. In 2020, the company completed the separation of its Upjohn business, eliminating an element that was driving down revenues. Today, Pfizer has many "best sellers," a new coronavirus drug, and a full development cycle. So is it worth investing in this drug maker in 2022?
First, let's look at the company's Covid business. Pfizer is a leading supplier of vaccines in many parts of the world. In the U.S., the company has fully vaccinated more than 118 million people. But overseas, Pfizer's vaccine business is actually even bigger. The company claims that it generates 75% of its revenues from vaccine sales outside the United States.
The European Union recently exercised an option to supply more Pfizer vaccines, bringing the total number of doses of Pfizer vaccines to be delivered this year to over 650 million. The full agreement, signed last spring, calls for up to 1.8 billion doses to be delivered to the region by 2023.
In Pfizer's latest earnings report, the company projected vaccine revenue of $36 billion for all of 2021.
But this year could turn out to be even more successful for Pfizer than last year. Here's why. Vaccine orders remain high -- but with the addition of a new coronavirus product. Late last year, Pfizer received approval for the emergency use of Paxlovid, an oral coronavirus treatment. Paxlovid is a pill that should be given at the first sign of infection. The drug's main ingredient blocks the action of an enzyme necessary for the coronavirus replication process.
The U.S. has ordered 20 million courses of Paxlovid treatment, and the U.K. has ordered 2.75 million. SVB Leerink analyst Geoffrey Porges predicts that Paxlovid will generate more than $24 billion in revenue this year and $29.7 billion in vaccines, according to FiercePharma. That amounts to more than $50 billion in revenue from the coronavirus program alone.
Of course, investors are most concerned about what will happen to these revenues in a post-pandemic world. Right now, it's impossible to accurately predict the level of revenue from the coronavirus program in the future. And that represents uncertainty. Nevertheless, experts say the coronavirus will exist. And that means we will need remedies and treatments. So we can probably expect a satisfactory level of revenue from coronavirus-related products for quite some time.
But here's the best news: Pfizer is far from being a coronavirus-only company. The company's nine-month earnings report shows that at least six products are generating blockbuster revenue. And in the third quarter, the company says, revenue excluding the coronavirus vaccine rose 7 percent to more than $11 billion.
As if that weren't enough, Pfizer has something else to like. And that's the pipeline. The company is working on 94 programs -- 29 of which are in Phase 3 and nine of which are in the registration phase. That means we may see a new batch of drugs in the not-too-distant future. This is important because the patent on some of Pfizer's drugs expires at the end of this decade. The blood-thinning drug Eliquis, for example, will lose protection in 2028. This is a standard part of life for a pharmaceutical company - and that's why it's important to have a strong product portfolio to make up for future patent expirations.
Now let's look at the valuation. As mentioned earlier, Pfizer's stock price has risen slightly. But it is still trading at very reasonable levels. It trades at only 8.5 times projected earnings. In addition, Pfizer pays a solid dividend, with a yield of over 2.8%.
So should you invest in Pfizer in 2022? Well, now seems like a good time to do so. The company generates billions of dollars in revenue from its coronavirus vaccine program. It has a portfolio of non-coronavirus drugs and a full cycle of late-stage research. The stock looks inexpensive -- and an investment in this major pharmaceutical player will provide you with passive income in the form of dividends. All of this is a great formula for success this year and in the years to come.
