Pfizer Inc.’s (PFE) 10-µg booster dose of Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine for children received Emergency Use Authorization from the U.S. Food and Drug Administration on October 12, 2022. This approval is yet another feather in PFE’s cap. This development should boost its share price. PFE has co-developed the vaccine with BioNTech (BNTX).
Moreover, amid the current uncertain market conditions, PFE could cushion one’s portfolio with its reliable dividends. PFE paid dividends for 32 consecutive years. Its dividend payouts have grown at a 5.9% CAGR over the past five years and a 5.7% CAGR over the past three years. Its current dividend yield is 3.63%, while its four-year average yield is 3.62%.
PFE has lost 4.2% over the past month and 25.3% year-to-date to close the last trading session at $43.26. However, it has gained 6.7% over the past year.
Here is what could shape PFE’s performance in the near term:
Solid Financials
PFE’s revenues came in at $27.74 billion for the second quarter that ended July 3, 2022, up 46.8% year-over-year. Its net income came in at $9.91 billion, up 78.1% year-over-year, while its EPS came in at $1.73, up 76.5% year-over-year. Moreover, its income from operations came in at $11.45 billion, up 64.7% year-over-year.
Attractive Valuations
PFE’s forward EV/Sales of 2.53x is 33.5% lower than the industry average of 3.80x. Its forward EV/EBITDA of 5.56x is 57% lower than the industry average of 12.94x. Also, its forward Price/Sales of 2.48x is 43.4% lower than the industry average of 4.38x, while its forward Price/Book of 2.50x is 1.3% lower than the industry average of 2.53x.
Robust Profit Margins
PFE’s trailing-12-month gross profit margin of 62.75% is 15.2% higher than the industry average of 54.49%. Its trailing-12-month EBITDA margin of 42.97% is significantly higher than the industry average of 3.29%. Moreover, its trailing-12-month net income margin of 28.94% is higher than the negative industrial average of 2.69%.
In addition, its trailing-12-month ROCE, ROTC, and ROTA of 37.50%, 20.28%, and 15.01%, compared with the industry averages of negative 38.60%, 21.31%, and 29.63%, respectively.
POWR Ratings Reflect Promising Outlook
PFE has an overall rating of A, which equates to a Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Value, in sync with its lower-than-industry valuation multiples. It has a B grade for Quality, consistent with its higher-than-industry profitability margins.
In the 161-stock Medical – Pharmaceuticals industry, PFE is ranked #11.
Click here for the additional POWR Ratings for PFE (Growth, Momentum, Stability, and Sentiment).
View all the top stocks in the Medical – Pharmaceuticals industry here.
Bottom Line
PFE’s revenue is expected to increase 42.4% year-over-year to $1.10 trillion in 2022. Its EPS is expected to increase 135.3% per annum for the next five years. PFE has witnessed significant investors’ attention amid the pandemic. And given the stock’s attractive valuations and robust profitability, I think PFE could still be worth owning.
How Does Pfizer Inc. (PFE) Stack Up Against its Peers?
While PFE has an overall POWR Rating of A, one might consider looking at its industry peers, Merck & Co., Inc. (MRK), Novartis AG (NVS), and Johnson & Johnson (JNJ), which also have an overall A (Strong Buy) rating.
PFE shares fell $0.01 (-0.02%) in after-hours trading Wednesday. Year-to-date, PFE has declined -25.26%, versus a -21.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
This Pharmaceutical Stock Is Still a Smart Buy in 2022 StockNews.com
