The past few years have been tough ones for investors holding shares of Pfizer (NYSE: PFE). The Big Pharma stock is down by more than half from the peak it set in late 2021.
Pfizer’s stock price was hammered, but that didn’t prevent the company from meeting and raising its dividend commitment. Last December, the pharmaceutical company raised its payout for the 15th consecutive year.
Shares of Pfizer offer an eye-popping 6.1% dividend yield at recent prices. Is the stock a buy for income-seeking investors? To find out, we’ll need to weigh its strengths against reasons to avoid the stock.
Reasons to buy Pfizer now
Sales of Pfizer’s COVID-19 vaccine, Comirnaty, and its antiviral-treatment Paxlovid soared to a combined $56 billion in 2022. The stock is down because sales of these drugs collapsed faster than expected. The stock could be a smart buy now because the company wisely reinvested a large swath of the proceeds.
Last year, Pfizer acquired Seagen, a cancer drug developer with four commercial-stage therapies, for about $43 billion. Also in 2023, the Food and Drug Administration approved a record nine new medicines from Pfizer’s late-stage development pipeline.
One of the newly approved treatments Pfizer’s launching now, Velsipity, came from the $6.7 billion acquisition of Arena Pharmaceuticals in 2022. It could generate more than $2 billion in sales by 2030 as a treatment for ulcerative colitis.
Also in 2022, Pfizer acquired Biohaven and its migraine headache drugs for $11.6 billion. The big purchase gave the company Nurtec, which is already on its way to becoming a blockbuster that could produce more than $1 billion in annual revenue.
Last year, the FDA approved Zavzpret, a drug similar to Nurtec that works as a fast-acting nasal spray and could be more popular than the original.
If we ignore Paxlovid, Comirnaty, and the negative effects of a stronger dollar, Pfizer reported total first-quarter sales that rose 11% year over year. With a lot of new drugs to sell, Pfizer expects adjusted earnings to reach a range between $2.15 and $2.35 per share this year, which is…
..
