Will Pfizer Stock See Higher Levels Post Q1 Earnings?

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Pfizer

Pfizer (NYSE: PFE) is scheduled to report its Q1 2023 results on Tuesday, May 2, and we expect it to see higher levels, with its revenue and earnings expected to exceed the consensus estimates. Its Covid-19 vaccine and the antiviral pill will see a significant drop in sales. The combined revenue from these two products is estimated to be $21.5 billion in 2023, compared to $56.7 billion in 2022. However, excluding the Covid-19 products, the company’s sales will likely trend higher. Not only do we expect Pfizer to post upbeat Q1 results, we find its stock undervalued, as discussed below. Our interactive dashboard on Pfizer Earnings Preview has additional details.

(1) Lower Covid-19 product sales to weigh on top-line

  • Trefis estimates Pfizer’s Q1 2023 revenues to be $16.8 billion, reflecting a 35% y-o-y decline and slightly above the $16.6 billion consensus estimate.
  • Although the contribution of Pfizer’s Covid-19 products is expected to decline going forward, its other products, including Eliquis (alliance revenue), Vyndaqel, and Prevnar, will likely see steady sales growth with market share gains.
  • Looking at Q4 2022, Pfizer saw a 2% rise in revenue to $24.3 billion, as a 7% rise in Primary Care more than offset an 11% fall in Specialty Care sales and a 7% decline in Oncology drugs sales.
  • Our dashboard on Pfizer Revenues offers details on the company’s segments.
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(2) EPS likely to be above the consensus estimates

  • Pfizer’s Q1 2023 adjusted earnings per share (EPS) is expected to be $1.00 per Trefis analysis, marginally above the consensus estimate of $0.98.
  • Pfizer’s adjusted net income of $6.6 billion in Q4 2022 reflected a significant 44% rise from its $4.5 billion figure in the prior-year quarter, primarily due to higher in-process research and development expenses recorded in Q4 2021.
  • For the full year 2023, we expect the adjusted EPS to be much lower at $3.35, compared to $6.58 in 2022.

(3) PFE stock is undervalued

  • We estimate Pfizer’s Valuation to be $56 per share, a significant 45% above the current market price of $39.
  • At its current levels, PFE stock is trading at a 12x forward earnings forecast of $3.35 on a per-share and adjusted basis for the full-year 2023, aligning with its last four-year average.
  • However, valuing the company using a historical P/E multiple is difficult, given that the earnings are expected to decline in the near term, with a lower contribution from its Covid-19 products. Pfizer’s management has stated that 2023 will be the low year for the company before its returns to growth from 2024.

While PFE stock looks undervalued, 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 and recent market volatility have created many pricing discontinuities that 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, the Fed raising interest rates, and concerns over declining earnings in the near term, PFE has fallen 24% 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 Apr 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 PFE Return -5% -24% 19%
 S&P 500 Return 1% 8% 85%
 Trefis Multi-Strategy Portfolio -1% 7% 237%

[1] Month-to-date and year-to-date as of 4/28/2023
[2] Cumulative total returns since the end of 2016

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