Should You Buy Pfizer Stock Ahead of Its Q2 Results?

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Pfizer (NYSE: PFE) is scheduled to report its Q2 2022 results on Thursday, July 28, and we expect it to post revenue and earnings well above the consensus estimates. Its Covid-19 vaccine and the antiviral pill will continue to drive revenue growth. The company has guided for $54 billion in 2022 sales from these two products, of which it garnered around $15 billion in Q1. Not only do we believe that the Q1 results may be above consensus, but we also believe that PFE stock has some more room for growth, as discussed below. Our interactive dashboard on Pfizer Earnings Preview has additional details.

(1) Revenues expected to be above the consensus estimates

  • Trefis estimates Pfizer’s Q2 2022 revenues to be $26.5 billion, reflecting a solid 39% y-o-y growth and above the $26.0 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 Eliquis (alliance revenue), Vyndaqel, and Prevnar, will likely see strong sales growth with market share gains.
  • Looking at Q1 2022, Pfizer saw a significant 77% rise in revenue led by its Covid-19 vaccine sales, which accounted for over half of the company’s total sales.
  • Pfizer’s $25.7 billion sales were led by a rise in Vaccines, Oncology, Hospital, and Rare Diseases segments, partly offset by lower sales for its Internal Medicine and Inflammation & Immunology segments.
  • Our dashboard on Pfizer Revenues offers more details on the company’s top line and its comparison to peers.
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(2) EPS likely to be comfortably above the consensus estimates

  • Pfizer’s Q2 2022 adjusted earnings per share (EPS) is expected to be $1.92 per Trefis analysis, well above the consensus estimate of $1.80.
  • Pfizer’s adjusted net income of $9.3 billion in Q1 2022 reflected a significant 74% rise from its $5.4 billion figure in the prior-year quarter, led by higher revenues.
  • However, inflationary headwinds, and supply chain constraints may threaten margin expansion in the near term.
  • For the full year 2022, we expect the adjusted EPS to be higher at $7.05, compared to $4.42 in 2021.

(3) PFE stock has more room for growth

  • We estimate Pfizer’s Valuation to be $60 per share, which is 19% above the current market price of $51.
  • Our valuation is based on a forward P/E ratio of around 9x based on our earnings forecast of $7.05 on a per-share basis for full-year 2022. This compares with an average of 10x seen over the last three years.
  • We have allocated a lower earnings multiple for Pfizer due to an expected decline in earnings over the coming years as demand for Covid-19 products fades.

While PFE stock has more room for growth, it is helpful to see how Pfizer’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

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 IDEXX Laboratories vs. Entegris.

With inflation rising and the Fed raising interest rates, PFE has fallen 10% this year. Can it drop more? See how low Pfizer stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 PFE Return -3% -14% 56%
 S&P 500 Return 5% -17% 77%
 Trefis Multi-Strategy Portfolio 10% -15% 236%

[1] Month-to-date and year-to-date as of 7/20/2022
[2] Cumulative total returns since the end of 2016

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