Pfizer Inc. (PFE - Get Rating) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas.

On August 8, 2022, PFE declared that it would acquire the renowned biopharmaceutical company, Global Blood Therapeutics, Inc. (GBT), under a special agreement, for co-developing advanced treatment and support programs concerning Sickle Cell Disease. This is expected to diversify PFE’s portfolio.

In addition, the Food and Drug Administration plans to authorize updated versions of PFE’s omicron (covid variant) targeted booster doses around Labor Day. This fresh batch of vaccine rollouts might bring PFE under the spotlight once again.

Moreover, on June 29, 2022, PFE and BioNTech SE (BNTX) announced their new vaccine supply agreement with the U.S. government to support the continued fight against COVID-19 with 105 million additional doses.

However, PFE has lost 7.5% over the past month and 18.9% year-to-date to close the last trading session at $47.90. It has gained marginally in the past year.

Here is what could shape PFE’s performance in the near term:

Solid Financials

PFE’s revenues for the 2022 second quarter came in at $27.74 billion, up 46.8% year-over-year. Its revenue from vaccines came in at $10.46 billion, up 13.4% year-over-year. Moreover, its adjusted income came in at $11.66 billion, up 93.5% year-over-year, while its adjusted EPS came in at $2.04, up 92.5% year-over-year.

In addition, PFE’s dividend payouts have grown at a 5.9% CAGR over the past five years. Its current dividend yield amounts to 3.37%, while its four-year average yield is 3.60%.

Attractive Valuations

PFE’s forward EV/S of 2.69x is 36.8% lower than the industry average of 4.26x. Its forward EV/EBITDA of 5.93x is 57.5% lower than the industry average of 13.96x.

Furthermore, its forward EV/EBIT of 6.62x is 61.3% lower than the industry average of 17.12x. Also, its forward P/S of 2.62x is 47.4% lower than the industry average of 4.98x.

Robust Profit Margins

PFE’s trailing-12-month gross profit margin of 62.75% is 14.6% higher than the industry average of 54.74%. Its trailing-12-month EBIT and EBITDA margins of 38.05% and 42.97% are significantly higher than the industry averages of 0.17% and 3.67%, respectively.

Also, its trailing-12-month net income margin of 28.94% is higher than the negative industry average of 2.40%. In addition, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 37.50%, 20.28%, and 15.01%, compare with the negative industry averages of 38.46%, 21.27%, and 29.64%, respectively.

POWR Ratings Reflect Promising Outlook

PFE has an overall rating of A, which equates to 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 167-stock Medical – Pharmaceuticals industry, PFE is ranked #10.

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

Pharmaceutical veteran company PFE has been a significant beneficiary of the pandemic with its vaccine rollout, reaping fortunes. And with the new Omicron booster rollouts ahead, the company is expected to garner massive returns.

Analysts expect its revenue and EPS to increase 23.5% and 46.8% year-over-year to $100.41 billion and $6.49 in 2022. Also, Wall Street analysts expect the stock to hit $56.40 in the near term, indicating a potential upside of 17.8%. 

Given the favorable growth prospects, I think dividend-paying gem PFE is an ideal addition to your portfolio ahead of its omicron booster dose rollout.

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, Johnson & Johnson (JNJ - Get Rating), Novartis AG (NVS - Get Rating), and Bristol-Myers Squibb Company (BMY - Get Rating), which also have an overall A (Strong Buy) rating.

PFE shares fell $0.36 (-0.75%) in premarket trading Friday. Year-to-date, PFE has declined -17.48%, versus a -11.14% 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. More...

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