Pfizer (NYSE: PFE) is scheduled to report its Q1 2022 results on Tuesday, May 3. We expect the company to likely post revenue and earnings below the consensus estimates. The revenue from its Covid-19 vaccine and antiviral pill sales may be lower than earlier anticipated. The company has guided for $54 billion in 2022 sales from these two products, but the distribution will likely be uneven over the quarters. While we believe that the Q1 results may be below consensus, we find PFE stock undervalued at its current levels, as discussed below. Our interactive dashboard on Pfizer Earnings Preview has additional details.
(1) Revenues expected to be below the consensus estimates
- Trefis estimates Pfizer’s Q1 2022 revenues to be $22.5 billion, compared to the $23.8 billion consensus estimate.
- Pfizer’s Covid-19 vaccine and antiviral pill remain the key growth drivers in the near term.
- The company’s other products, including Ibrance and Prevnar, are likely to see an uptick in sales.
- Looking at Q4 2021, Pfizer saw over a 2x rise in revenue led by its Covid-19 vaccine sales, which alone accounted for 52% of the company’s total sales. However, Prevnar and Ibrance both saw a y-o-y decline in sales.
- Our dashboard on Pfizer Revenues offers more details on the company’s top line and its comparison to peers.
(2) EPS likely to be below the consensus estimates
- Pfizer’s Q1 2022 adjusted earnings per share (EPS) is expected to be $1.45 per Trefis analysis, below the consensus estimate of $1.50.
- Pfizer’s adjusted net income of $6.2 billion in Q4 2021 reflected a significant 156% rise from its $2.4 billion figure in the prior-year quarter, led by higher revenues and operating margins.
- However, inflationary headwinds and supply chain constraints threaten margin expansion in the near term.
- Our dashboard on Pfizer’s Operating Income has more details.
- For the full year 2022, we expect the adjusted EPS to be higher at $6.90, compared to $4.42 in 2021.
(3) PFE stock is undervalued
- We estimate Pfizer’s Valuation to be $63 per share, which is 28% above the current market price of $49.
- This represents a forward P/E multiple of 9x based on our 2022 EPS forecast of $6.90.
- The P/E multiple above compares with 13x for MRK and 19x for JNJ stock, based on our estimates.
- A lower P/E multiple for Pfizer can be attributed to an expected decline in earnings over the coming years, with declining Covid-19 vaccine sales post-pandemic.
- 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
Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Honeywell vs. Merck.
|S&P 500 Return||-8%||-12%||86%|
|Trefis Multi-Strategy Portfolio||-9%||-16%||231%|
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