Pfizer (NYSE: PFE) is scheduled to report its Q3 2022 results on Tuesday, November 1, and we expect it to post revenue and earnings above the consensus estimates. Its Covid-19 vaccine and the antiviral pill will continue to aid revenue growth. However, their contribution is now expected to decline. The company has guided for $54 billion in 2022 sales from these two products, of which it has already garnered around $32 billion in the first half. Not only do we expect Pfizer to post upbeat Q3 results, we find its stock undervalued, 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 Q3 2022 revenues to be $21.5 billion, reflecting an 11% y-o-y decline, but above the $21.1 billion consensus estimate.
- The contribution of Pfizer’s Covid-19 products is expected to decline in the second half of the year.
- The company’s other products, including Eliquis (alliance revenue), Vyndaqel, and Prevnar, will likely see strong sales growth with market share gains.
- Looking at Q2 2022, Pfizer saw a significant 53% rise in revenue led by its Covid-19 product sales, which accounted for over 60% of the company’s total sales.
- Pfizer’s $27.7 billion sales were led by a rise in Vaccine, Oncology, Hospital, Internal Medicine, and Rare Diseases segments, partly offset by lower sales for its Inflammation & Immunology segments.
- Our dashboard on Pfizer Revenues offers more details on the company’s top line and its comparison to peers.
(2) EPS likely to be slightly above the consensus estimates
- Pfizer’s Q3 2022 adjusted earnings per share (EPS) is expected to be $1.44 per Trefis analysis, slightly above the consensus estimate of $1.39.
- Pfizer’s adjusted net income of $11.7 billion in Q2 2022 reflected a significant 94% rise from its $6.0 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 $6.56, compared to $4.42 in 2021.
(3) PFE stock is undervalued
- We estimate Pfizer’s Valuation to be $60 per share, which is 31% above the current market price of $46.
- Our valuation is based on a forward P/E ratio of around 9x based on our earnings forecast of $6.56 on a per-share and adjusted basis for the 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 its Covid-19 products fades.
Furthermore, the Covid-19 crisis plus recent market volatility has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for IDEXX Laboratories vs. Entegris.
With higher inflation and the Fed raising interest rates, PFE has fallen 23% 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.
|S&P 500 Return||6%||-20%||70%|
|Trefis Multi-Strategy Portfolio||4%||-23%||204%|
 Month-to-date and year-to-date as of 10/28/2022
 Cumulative total returns since the end of 2016