Source: PaxForex Premium Analytics Portal, Fundamental Insight

Pfizer isn't currently in the spotlight as a hot stock. Following its significant surge during the peak of the pandemic driven by optimism surrounding its coronavirus vaccine, subsequent sources of growth haven't yielded similarly substantial returns.

Yet, for investors, Pfizer still holds potential as a compelling investment once some of the more ambitious expectations regarding its future are reined in. Let's delve into the perspectives of the skeptics outlining why the stock may not be an attractive buy, and then explore the opposing viewpoint.

Under typical circumstances, a major pharmaceutical company boasting a diverse portfolio of essential drugs and recent successes like the Comirnaty coronavirus vaccine would be thriving. In this scenario, the investment rationale would be evident - invest in the stock due to the company's track record of consistently driving upward movement by successfully developing impactful drugs for targeted markets.

However, the current landscape for Pfizer is far from that ideal scenario. Rather than being a reigning leader, it appears more akin to a former champion on the decline. Over the past three years, its total shareholder return has dipped by 19%, contrasting sharply with the S&P 500's 32% increase over the same period. Additionally, its trailing 12-month revenue has only seen a modest 6% growth, reaching $58.5 billion, while net income has plummeted by 83%, dropping to $2.1 billion.

Moreover, Pfizer grapples with a staggering $75.3 billion in debt and capital lease obligations. While it's expected to manage its debt over time, interest expenses will continue to weigh on earnings growth for the foreseeable future. Notably, Pfizer wasn't experiencing rapid expansion even prior to the surge in demand for coronavirus treatments.

Furthermore, there's little prospect for another windfall akin to the one generated by its coronavirus treatments. The sharp declines in revenue and earnings can be largely attributed to the waning global demand for coronavirus vaccines and antivirals. From the perspective of the skeptics, both the financial metrics and the broader macroeconomic landscape paint a challenging picture.

It's unlikely that Pfizer will swiftly regain its former heights in revenue, profitability, or stock price. It appears that its successes with coronavirus treatments weren't effectively translated into funding future growth avenues, nor did they leave behind a significant residual market following the initial surge of demand.

The bearish perspective on Pfizer's current performance holds merit when examining historical financial metrics, which clearly indicate a significant downturn compared to its peak performance from 2020 to mid-2022. It's evident that it will take considerable time for this situation to reverse. However, by the time that turnaround occurs, those adhering to the bearish stance may miss out on an exceptional buying opportunity. Here's why.

Presently, Pfizer boasts an extensive pipeline, with 31 programs in phase 3 clinical trials and 34 programs in phase 2 trials. Particularly noteworthy is its robust oncology pipeline, where management anticipates the potential emergence of eight blockbuster drugs within the next six years, each capable of generating over $1 billion in annual revenue.

The company's foray into cancer drug research and development (R&D) has contributed to its current debt levels. Notably, the acquisition of Seagen, a significant oncology biotech, was financed through debt. As Pfizer gradually pays down this debt burden over the coming years and new revenue streams come online, management intends to balance capital allocation between internal reinvestment in R&D and shareholder rewards such as dividends and share repurchases.

Currently, Pfizer offers an attractive dividend yield of 6.3%. While there's a possibility of the yield rising further if the stock continues to decline, it's inevitable that the market will eventually recognize the company's true value. Essentially, as progress on Pfizer's strategic plan to focus on cancer therapies becomes increasingly evident, investors who wait until that juncture to invest may not enjoy the maximum benefits.

For investors willing to wait a few years for the fruition of its new revenue sources, Pfizer represents a compelling buy opportunity today. With a longstanding presence in the pharmaceutical industry and a track record of successfully commercializing winning medicines across various economic landscapes, Pfizer is poised to uphold its reputation in the long run. Ultimately, those who seize the opportunity amid uncertainty stand to reap the greatest rewards in the future.

As long as the price is below 28.00, follow the recommendations below:

• Time frame: D1
• Recommendation: short position
• Entry point: 25.62
• Take Profit 1: 24.00
• Take Profit 2: 21.00

Alternative scenario:

If the level of 28.00 is broken-out, follow the recommendations below:

• Time frame: D1
• Recommendation: long position
• Entry point: 28.00
• Take Profit 1: 30.00
• Take Profit 2: 32.00