Key points
- Pfizer faced a tough 2023, marked by a significant 41.84% decline in its stock value as revenue from COVID-19 drugs fell faster than expected.
- The company expects full-year 2024 revenue to be between $58.5 billion and $61.5 billion, disappointing investors and analysts.
- The company’s focus on acquisitions is slowing, and Pfizer is once again focusing on increasing dividends and stock buybacks.
- 5 stocks we like better than Pfizer
Investors who own Pfizer Inc. NYSE:PFE One might have expected 2023 to be what football teams call a “rebuilding year.” The company has shifted its focus from COVID-19 drugs to potential deals, stock buybacks and new treatments in its pipeline.
While the years of reconstruction are often complicated, Pfizer’s was downright chaotic.
Pfizer stock is down 41.84% this year, putting it among the worst performers pharmaceutical stocks within the SPDR Fund for Selected Healthcare Sector NYSEARCA: XLV. Only Moderna inc. NYSE: mRNAalso declining due to high sugar levels linked to COVID-19 drugs, performed worse in 2023.
Pfizer’s situation worsened when the company issued 2024 guidance well below what investors expected.
Fall in revenue from Covid medicines
The company said it expects full-year 2024 revenue to be between $58.5 billion and $61.5 billion, which includes approximately $8 billion of sales forecast for COVID-19 drugs Comirnaty and Paxlovid. That figure is well below analysts’ forecasts, which called for $13.8 billion in combined sales of COVID-19 drugs.
Pfizer’s forecast also includes about $3.1 billion in expected revenue from cancer drugmaker Seagen, which Pfizer completed its $43 billion acquisition on Dec. 14.
The company issued earnings per share forecasts of between $2.05 and $2.25, significantly below analysts’ midpoint of $2.31 per share.
Shares fell nearly 7%, or volume more than four times the average, after Pfizer released its guidance on Dec. 13. Pfizer Tableyou can spot the downward trajectory that began in early 2022. The stock had a brief rally attempt in late 2022, but has been down for 11 out of 12 months in 2023.
Analysts cut price targets
Pfizer analyst forecasts reveal that analysts at major investment banks UBS and Barclays, as well as regional bank Truist, are lowering their price targets on Pfizer following disappointing forecasts.
There are some positives. For example, even though the company’s earnings forecast is lower than Wall Street’s, if Pfizer meets or beats its own forecast, it will represent a return to profit growth after this year’s decline.
Additionally, for investors looking for a well-established component of the S&P 500 with a high dividend yield and a history of increasing shareholder payouts, Pfizer may not look so bad.
THE Pfizer dividend the yield is 5.94% and it has a 14-year history of increasing payments. This earns the company a spot on MarketBeat’s list those who get dividends.
Faced with the expiration of patents
Another potential bright spot for Pfizer could be its pipeline, but analysts are divided on this issue. Patent expirations are a common occurrence for pharmaceuticals, and Pfizer will face a number of issues between 2025 and 2028, including its top-selling drugs to treat breast cancer and stroke.
Like other big pharmaceutical companies, Pfizer is filling pipeline gaps through acquisitions and its own research and development. In 2022, it made three acquisitions worth a total of $26 billion to access treatments for ulcerative colitis, sickle cell disease and migraines.
Internally, Pfizer is working on treatments for influenza, meningitis and respiratory syncytial virus, or RSV, as well as blood cancer, multiple myeloma and atopic dermatitis. The company plans to generate $20 billion or more in sales by 2030 through its own research and development.
Focus on buybacks, dividends increase
In May 2023, Pfizer indicated that the era of large acquisitions was slowing and that the company was once again focusing on share repurchases after suspending its repurchase program in 2022.
CEO Albert Bourlas also said the company may be able to increase its dividend more quickly, with more cash freed up through a smaller number of acquisitions.
Pfizer announced it would increase its dividend on March 1, 2024, to 42 cents per share, an increase of 2.4% from the payment for the same period in 2023.
Before you consider Pfizer, you’ll want to hear this.
MarketBeat tracks Wall Street’s top-rated and top-performing research analysts daily and the stocks they recommend to their clients. MarketBeat identified the five actions that top analysts are quietly whispering to their clients to buy now before the broader market tanks…and Pfizer wasn’t on the list.
While Pfizer currently enjoys a “Hold” rating among analysts, top-rated analysts believe these five stocks are Better Buys.
MarketBeat just released its list of 10 cheap stocks that have been overlooked by the market and could be seriously undervalued. Click the link below to see which companies are on the list.
