Is Pfizer stock poised for a comeback?

The pharmaceutical giant Pfizer (NYSE: PFE) has been in freefall since the start of 2022, with shares down 46%. Pfizer’s revenue and earnings fell off a cliff, along with its coronavirus results, as the pandemic began to fade, explaining its poor performance over the past 18 months. However, there are signs that Pfizer is starting to make a comeback. That’s an important takeaway from Pfizer’s second-quarter results. Let’s dig.

Revenues are finally heading in the right direction

In 2022, Pfizer generated sales of $100 billion, becoming the first company in the biopharmaceutical industry to manage this feat. Of course, the drugmaker has achieved this thanks to its work in the field of the coronavirus. It was always going to be a tough act to follow, especially as the pandemic began to recede. That’s why Pfizer’s revenue has declined year-over-year since then — through the second quarter of 2024. Pfizer’s sales for the period were $13.3 billion, up 2% year-over-year.

Things look even better once we exclude Pfizer’s COVID-19 portfolio, without which the company’s revenue would have risen 14%. True, Pfizer completed its acquisition of cancer specialist Seagen for $43 billion in December. Seagen’s approved products did contribute to Pfizer’s top-line growth, but there was more to the story. Pfizer’s pre-acquisition earnings may also have moved in the right direction in the first quarter. Several products contributed to Pfizer’s second-quarter performance, including migraine treatment Nurtec ODT and Vyndaqel, which treats a heart disease called transthyretin amyloid cardiomyopathy.

There was also more good news for investors as Pfizer raised its full-year revenue and earnings guidance. The pharmaceutical giant had previously expected revenue for the year to be between $58.5 billion and $61.5 billion; the new projected range is $59.5 billion to $62.5 billion, an increase of $1 billion. The previous guidance for adjusted earnings per share of $2.15 to $2.35 was updated to $2.45-$2.65.

Stock still looks like a great pick

Pfizer won seven new approvals last year. Most of these have yet to have a significant impact on its top line. The company is also developing newer products. Pfizer is diving into the weight loss market with its own GLP-1 candidate, danuglipron, which produced encouraging results in a phase 2 study. Moreover, Pfizer’s bet to increase its presence in oncology is still in its early stages .

That’s why it acquired Seagen, which had several cancer drugs in development. In other words, there will be plenty of catalysts for Pfizer in the coming quarters as newer products slowly begin to make an impact and make significant clinical progress.

In my view, the Pfizer sale went too far and the company looked deeply undervalued. Pfizer’s forward price-to-earnings ratio is 10.8. The average for the healthcare industry is 18.3. Finally, Pfizer is an excellent dividend stock. The company currently offers an incredible yield of 5.88%. It has increased its payouts by nearly 17% over the past five years. Pfizer remains committed to rewarding its shareholders with regular dividends, as management once again emphasized during its latest earnings conference call.

Here’s the bottom line: Value and dividend investors will find exactly what they’re looking for with Pfizer. The company will eventually return to normal year-over-year growth as it renews its pipeline of drug treatments.

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Prosper Junior Bakiny has no position in any of the shares mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.

Is Pfizer stock poised for a comeback? was originally published by The Motley Fool