Does The Current Dip In Pfizer Stock Offer A Buying Opportunity?

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[Updated: Feb 10, 2022] Pfizer Q4 Earnings Update

The stock price of Pfizer (NYSE: PFE) has seen a fall of 8% over the last month, while it is down over 3% in a week. The recent decline can be attributed to the company’s mixed Q4 results, with sales falling below, and earnings above, the street estimates. Pfizer’s revenue of $23.8 billion in Q4 was up 106% y-o-y, but it fell short of the $24.2 consensus estimate. The sales growth was largely driven by its Covid-19 vaccine, which garnered $12.5 billion, taking the full-year 2021 vaccine sales north of $36 billion.  Excluding the vaccine and the new Covid-19 treatment, Pfizer’s Q4 revenues actually declined by 2%. Looking at the bottom line, the company reported an adjusted EPS of $1.08, up 156% y-o-y, well above the $0.87 consensus estimate.

Looking forward, Pfizer expects 2022 revenue of $100 billion and EPS of $6.45 at the mid-point of the provided range. Note that out of $100 billion, $54 billion is expected from sales of the Covid-19 vaccine and treatment. Despite a strong earnings beat and strong outlook, PFE stock saw lower levels this week, as the investors were anticipating even higher sales in 2022. It should be noted that Pfizer’s projections of Covid-19 vaccine and treatment sales are based on deals already made, and the figure is likely to inch higher as the year progresses.

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We have also updated our model for Pfizer to reflect the latest earnings. We now expect the total sales to top $105 billion, and adjusted EPS to be $6.90, well above the company’s provided guidance. We now estimate Pfizer’s Valuation to be $63 per share, which is 23% above the current market price of $51, implying that the current dip in PFE stock is a good buying opportunity for higher gains in the long term. This represents a P/E ratio of 9x based on our forecast of $6.90 EPS in 2022. The 9x figure compares with an average of around 11x seen between 2019 and 2021.

But what about the near-term outlook for PFE stock?

Given that PFE stock has seen a decline of 8% in a month, will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a good chance of a rise in PFE stock over the next monthOut of 106 instances in the last ten years that PFE stock saw a twenty-one-day fall of 8% or more, 68 of them resulted in PFE stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 68 out of 106, or a good 64% chance of a rise in PFE stock over the coming month, implying that PFE stock is a good bet at its current levels, even for the short term, in our view. See our analysis on Pfizer Stock Chance of A Rise for more details.

 

Below you’ll find our previous coverage of PFE stock where you can track our view over time.

[Updated: Dec 16, 2021] Pfizer Stock Rise

The stock price of Pfizer (NYSE: PFE) has outperformed the broader indices. While the S&P500 index has seen a rise of 1% over the last month or so, PFE stock is up a solid 19%. This also compares with -10% returns for its peer – Merck, and 5% growth for Johnson & Johnson. PFE stock is also up over 14% over the last week, and it was up 6% yesterday after it reported that its antiviral pill reduces the risk of hospitalization and death from Covid-19 by nearly 90%. This is far more effective than a similar pill from Merck, partly explaining the decline in MRK stock.

Looking forward, the company is likely to continue to benefit from its vaccine now that several countries have approved the booster shots, and the new pill will also result in an uptick in overall sales, subject to regulatory approval. That said, going by our Pfizer’s Valuation, with an EPS estimate of $4.42 and a P/E multiple of around 13x in 2021, this translates into a price of $58, which is slightly below the current market price of around $59, implying that PFE stock is now fully valued, and it may be prudent for investors to wait for a dip to buy it.

But what about the near term, given that PFE stock has seen a sharp rise of 18% in a month? Going by its historical performance, there is a higher chance of a fall in PFE stock over the next month. Out of 23 instances in the last ten years that PFE stock saw a twenty-one day rise of 18% or more, only 10 of them resulted in PFE stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 10 out of 23, or only a 43% chance of a rise in PFE stock over the coming month. See our analysis on Pfizer Stock Chances of Rise for more details.

While PFE stock may see lower levels going forward, it is helpful to see how its peers stack up. Check out Pfizer Stock Comparison With Peers to see how PFE stock compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years data

  • After moving 14.4% or more over a five-day period, the stock rose in the next five days on 50% of the occasions.
  • After moving 7.5% or more over a ten-day period, the stock rose in the next ten days on 64% of the occasions
  • After moving 18.4% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 43% of the occasions.

This pattern suggests that there are higher chances of a rise in PFE stock over the next ten days, but it is likely to see lower levels over the next month or so, implying that PFE stock is currently best avoided in the near term.

Pfizer (PFE) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: PFE highest at 14.4%; RHHBY lowest at -2.6%
  • Ten-Day Return: LLY highest at 10.5%; RHHBY lowest at 0.5%
  • Twenty-One Days Return: PFE highest at 18.4%; MRK lowest at -10.0%

[Updated: Nov 18, 2021] Pfizer Stock Update

The stock price of Pfizer (NYSE: PFE) has seen a rise of 21% in a month following multiple positive developments, including positive data for its oral Covid-19 treatment pill, upbeat Q3 results, and more recently, closing the acquisition of Trillium Therapeutics for $2.3 billion. Pfizer announced its plans to acquire Trillium in August this year, while it made an initial investment of $25 million last year. Trillium’s pipeline, which includes TT-621 and TT-622, appears to be a good fit for Pfizer. TT-621 is a novel checkpoint inhibitor that activates anti-tumor activity by blocking the CD47 signal, while TT-622  is a fusion protein being tested for the treatment of lymphoma, multiple myeloma, and solid tumors.

But now that PFE stock has seen a 21% rise in a month, outperforming its peers with MRK stock up 7% and JNJ stock up just 2%, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is still a higher chance of a rise in PFE stock over the next month. Note that such a large move (over 20%) in a month is very rare for Pfizer and it has occurred only 12 times in the last ten years. Out of 12 such instances, 7 of them resulted in PFE stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 7 out of 12, or about a 58% chance of a rise in PFE stock over the coming month. See our analysis on Pfizer Stock Chances of Rise for more details.

Even if we were to look at our Pfizer’s Valuation, with an EPS estimate of around $4.40 and a P/E multiple of around 13x in 2021, this translates into a price of $56, which is 10% above the current market price of around $50, implying that there is still some room for growth in PFE stock. The company’s leading position in Covid-19 vaccines as well as its effective treatment for Covid-19 (pending for regulatory approval) are some of the near term triggers that will likely bolster its stock price growth.

While PFE stock may see higher levels going forward, it is helpful to see how its peers stack up. Check out Pfizer Stock Comparison With Peers to see how PFE stock compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

Pfizer (PFE) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: PFE highest at 3.8%; MRK lowest at -1.7%
  • Ten-Day Return: PFE highest at 13.5%; MRK lowest at -6.9%
  • Twenty-One Days Return: PFE highest at 20.9%; JNJ lowest at -0.4%

 

[Updated: Nov 8, 2021] PFE Stock Rise

The stock price of Pfizer (NYSE: PFE) surged 11% in a single day on Friday Nov 5, 2021. The rise can be attributed to the company announcing positive data for its oral pill for the treatment of Covid-19. Pfizer’s Covid-19 pill used in combination with an HIV drug cuts the risk of hospitalization or death by 89% in high-risk adults who’ve been exposed to the Covid-19 virus. [1] Pfizer’s oral pill is now the second antiviral pill after Merck’s to demonstrate strong effectiveness for treating Covid-19. The company will now seek regulatory approvals for this pill. Note that Pfizer’s pill appears to be more effective over Merck’s, which reduces the risk of hospitalization and death by 50% for patients with mild to moderate Covid-19.

Last week, Pfizer also released its upbeat Q3 results, with revenue of $24.1 billion, compared to our forecast of $23.5 billion and $22.6 billion consensus estimate. The company’s bottom-line of $1.34 on a per share and adjusted basis was up a solid 133% y-o-y, and compares with our forecast of $1.35 and consensus estimate of $1.08. The Covid-19 vaccine continued to be the key growth driver with sales of $13 billion during the quarter. The nine month sales (ending Sep 2021) for the vaccine now stands at over $24 billion, and Pfizer now forecasts its sales to be around $36 billion for the full-year 2021, and another $29 billion in 2022. Our dashboard on Pfizer Revenues offers more details on the company’s segments.

While the vaccine sales figures are in-line with our earlier forecasts, the oral pill is something that investors will be looking forward to. The Covid-19 vaccine sales are expected to decline with rising global vaccination rates, but the Covid-19 oral pills could garner recurring revenues for Pfizer in the years to come. The U.S. government has been in negotiations with Pfizer for 1.7 million courses of treatment, with an additional option for 3.3 million at a price of $700 per treatment, implying a potential revenue of as high as $3.5 billion from the U.S. government alone. [2]

Taking into account the company’s Q3 results as well as the positive data from its oral pill for Covid-19, we have now revised our Pfizer’s Valuation to $56 per share based on adjusted EPS of $4.40 and 12.7x P/E multiple in 2021. This reflects a premium of 8% to our prior estimate of $52. The change stems primarily from an upward revision in P/E multiple, as the earnings growth for Pfizer over the coming years is now expected to be better than our earlier estimates, given the potential recurring revenues from its oral pill (subject to regulatory approval) as well as some contribution from its Covid-19 vaccine, while its non-Covid-19 related business sees steady growth. Overall, we believe that despite a large 11% rise for PFE stock in a day, it has more room for growth, and it is likely to see higher levels going forward.

 

[Updated: Nov 1, 2021] PFE Q3 Earnings Preview

Pfizer (NYSE: PFE) is scheduled to report its Q3 2021 results on Tuesday, November 2. We expect the company to likely post revenue and earnings well above the consensus estimates, primarily led by its Covid-19 vaccine. Pfizer should see an overall pickup in pharmaceutical demand due to an increase in hospital visits with economies opening up gradually. We expect the company to navigate well based on these trends over the latest quarter. Furthermore, we also think PFE stock remains attractive at the current valuation. Trefis’ forecast indicates that Pfizer’s valuation is $52 per share, which is 18% above the current market price of $44. Our interactive dashboard analysis on Pfizer’s Pre-Earnings has additional details.

(1) Revenues expected to be above the consensus estimates

Trefis estimates Pfizer’s Q3 2021 revenues to be around $23.5 billion, 4% above the $22.6 billion consensus estimate. Now that the economies are opening up with vaccination programs underway in multiple countries, pharmaceutical companies will likely benefit from an increase in the volume of new patient starts. For Pfizer, its Covid-19 vaccine remains the key growth driver in the near term, with 2021 annual sales projected to be as high as $35 billion, per Trefis estimates.

Pfizer’s Q2 2021 sales were up 86% y-o-y to $19.0 billion, primarily driven by $7.8 billion sales from its Covid-19 vaccine, and the contribution of this vaccine is expected to remain high in Q3. Overall, it appears that the Covid-19 vaccine will continue to drive the company’s top and bottom line expansion for now, but leaving that aside, revenue for its other drugs grew 10% in Q2, led by strong growth in biosimilars and alliance revenues, a trend expected to continue in the near term. Our dashboard on Pfizer Revenues offers more details on the company’s segments.

2) EPS likely to be above the consensus estimates

Pfizer’s Q3 2021 adjusted earnings per share (EPS) is expected to be $1.35 per Trefis analysis, compared to the consensus estimate of $1.08. Pfizer’s adjusted net income of $6.1 billion in Q2 2021 reflected a large 75% rise from its $3.5 billion figure in the prior-year quarter, primarily due to higher revenues. For the full year 2021, we expect the adjusted EPS to be higher at $4.65 compared to $2.22 in 2020.

(3) Stock price estimate 18% above the current market price

Going by our Pfizer’s Valuation, with an EPS estimate of $4.65 and a P/E multiple of 11x in 2021, this translates into a price of $52, over 18% higher than the current market price of $44. While the 11x figure is lower than the levels of over 14x seen in 2018 and 16x as recently as late 2020, this can be attributed to the fact that Pfizer’s EPS will be very high in 2021, followed by a decline from 2022 onward, with a slowdown in Covid-19 vaccine sales. Look at our Covid-19 Vaccine Updates for more details.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year.

While PFE stock is worth considering for more gains, it is helpful to see how its peers stack up. Check out how Pfizer Peers fare on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Feb 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 PFE Return -2% -13% 58%
 S&P 500 Return 2% -4% 105%
 Trefis MS Portfolio Return 2% -8% 264%

[1] Month-to-date and year-to-date as of 2/10/2022
[2] Cumulative total returns since the end of 2016

 

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Notes:
  1. Pfizer’s Press Release, Nov 5, 2021 []
  2. Pfizer Says Its Antiviral Pill Is Highly Effective in Treating Covid, Rebecca Robbins, The New York Times, Nov 5, 2021 []