Pfizer Stock To $32?

Our multi-factor assessment suggests that it may be time to buy more shares of PFE stock. We have, overall, a positive view of the stock, and a price of $32 may not be out of reach. We believe there is a near-equal mix of good and bad in PFE stock given its overall Moderate operating performance and financial condition. Considering stock’s Low valuation we think it is Attractive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $140 Bil in market cap, Pfizer provides biopharmaceutical products, including medicines, vaccines, and biosimilars for cardiovascular, metabolic, women’s health, and chronic immune and inflammatory diseases.

[1] Valuation Looks Low

This table highlights how PFE is valued vs broader market. For more details see: PFE Valuation Ratios

[2] Growth Is Inconsistent

• Pfizer has seen its top line shrink at an average rate of -12.4% over the last 3 years
• Its revenues have grown 14% from $56 Bil to $64 Bil in the last 12 months
• Also, its quarterly revenues grew 10.3% to $15 Bil in the most recent quarter from $13 Bil a year ago.

This table highlights how PFE is growing vs broader market. For more details see: PFE Revenue Comparison

[3] Profitability Appears Strong

• PFE last 12 month operating income was $17 Bil representing operating margin of 26.1%
• With cash flow margin of 23.8%, it generated nearly $15 Bil in operating cash flow over this period
• For the same period, PFE generated nearly $11 Bil in net income, suggesting net margin of about 16.8%

This table highlights how PFE profitability vs broader market. For more details see: PFE Operating Income Comparison

[4] Financial Stability Looks Strong

• PFE Debt was $61 Bil at the end of the most recent quarter, while its current Market Cap is $140 Bil. This implies Debt-to-Equity Ratio of 43.6%
• PFE Cash (including cash equivalents) makes up $13 Bil of $206 Bil in total Assets. This yields a Cash-to-Assets Ratio of 6.4%

[5] Downturn Resilience Is Weak

PFE has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• PFE stock fell 57.3% from a high of $61.25 on 16 December 2021 to $26.13 on 14 December 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $31.39 on 30 July 2024 , and currently trades at $24.66

 
2020 Covid Pandemic

• PFE stock fell 30.0% from a high of $40.71 on 23 January 2020 to $28.49 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 2 December 2020

 
2008 Global Financial Crisis

• PFE stock fell 57.9% from a high of $27.68 on 1 June 2007 to $11.66 on 2 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 29 January 2013

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