Buy or Sell Pfizer Stock?

We believe there are a few things to fear in PFE stock given its overall Weak operating performance and financial condition. This is aligned with the stock’s Low valuation because of which we think it is Fairly Priced.

Below is our assessment:

Stock-picking thrills fade fast when volatility hits. Smart financial advisors stay ahead by combining insights with action, channeling client capital into diversified portfolios that perform across cycles.

Let’s get into details of each of the assessed factors but before that, for quick background: With $143 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 Very Weak

• Pfizer has seen its top line shrink at an average rate of -13.2% over the last 3 years
• Its revenues have grown 3.9% from $60 Bil to $63 Bil in the last 12 months
• Also, its quarterly revenues declined -5.9% to $17 Bil in the most recent quarter from $18 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 $15 Bil representing operating margin of 24.6%
• With cash flow margin of 20.8%, it generated nearly $13 Bil in operating cash flow over this period
• For the same period, PFE generated nearly $9.8 Bil in net income, suggesting net margin of about 15.7%

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 $143 Bil. This implies Debt-to-Equity Ratio of 42.4%
• PFE Cash (including cash equivalents) makes up $15 Bil of $209 Bil in total Assets. This yields a Cash-to-Assets Ratio of 7.2%

[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 $25.21

 
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

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.