Source: PaxForex Premium Analytics Portal, Fundamental Insight
The current state of the stock market boasts record levels, but one notable exception to this trend is Pfizer. Over the past 12 months, shares of the pharmaceutical giant have declined by 28%, triggering investor concerns regarding its future growth potential.
Amidst this challenging environment, Pfizer finds itself undergoing a significant transition as it navigates towards new growth avenues. However, investors tend to display impatience towards turnaround narratives, particularly in the face of considerable uncertainty surrounding the company's post-transition trajectory.
For long-term investors, though, the present moment may present an opportune time to consider Pfizer's stock. With a more attractive valuation and the possibility of renewed growth on the horizon, could Pfizer prove instrumental in bolstering your investment portfolio?
A notable aspect of Pfizer's strategic approach is its prudent utilization of funds generated from its COVID-19 vaccine. Rather than relying solely on the revenue streams from its pandemic-related products, Pfizer has been proactive in deploying these resources. The company has embarked on a series of acquisitions and investments aimed at positioning itself for sustained growth in the future. This proactive stance signals Pfizer's commitment to fostering a growth-oriented business model.
Among the significant acquisitions, Pfizer's $43 billion purchase of cancer company Seagen stands out as a pivotal move in bolstering its oncology segment. Pfizer anticipates that Seagen's integration could contribute a substantial $10 billion to its top line by 2030.
In addition to Seagen, Pfizer has executed several other strategic acquisitions in recent years, including Biohaven Pharmaceuticals, Global Blood Therapeutics, ReViral, and Arena Pharmaceuticals. Through a combination of these acquisitions and its robust pipeline, Pfizer aims to augment its revenue by up to $25 billion by 2030.
However, Pfizer is also bracing for potential challenges, including an anticipated $18 billion decline in revenue from generics as key drugs such as Eliquis, Vyndaqel, and Ibrance face patent expiration in the coming years. Despite this impending loss, Pfizer's proactive approach towards strategic acquisitions and pipeline development underscores its commitment to sustaining long-term growth.
Pfizer's stock is currently hovering near its 52-week low, trading at a relatively modest 13 times its expected future earnings, according to analyst estimates. In comparison, the average healthcare stock commands a multiple of 19, while Pfizer's price-to-book ratio stands at just 1.8.
For investors eyeing Pfizer's stock, the allure lies in its affordability. Despite facing hurdles ahead, Pfizer isn't in dire straits. The challenges posed by patent expirations and the imperative to develop new drugs and pursue acquisitions are commonplace in the realm of big pharma, where patents have finite lifespans.
Adaptation is key, and Pfizer is actively embracing change. However, it will take time for the company to regain momentum in terms of growth. For the current year, Pfizer anticipates revenue in the range of $58.5 billion to $61.5 billion, reflecting marginal growth from the $58.5 billion reported in 2023.
Considering investment scenarios, if one had invested $10,000 in Pfizer, the stock would need to achieve a 100-fold return to reach millionaire status. Alternatively, at an investment of $25,000, a more modest 40-fold return would be required. However, for Pfizer to achieve a 40-fold increase, the company's market value would need to soar to $6.4 trillion - a figure far beyond any healthcare stock's valuation today.
While hoping for Pfizer to attain such astronomical heights might seem overly optimistic, even over extended timeframes, it's worth noting that Pfizer's shares have actually declined by more than 9% over the past decade.
Despite its strategic focus on long-term growth, Pfizer is unlikely to be the stock that catapults investors to millionaire status. While it may offer value due to its modest valuation, investors should temper their expectations given the significant challenges Pfizer faces on its growth trajectory.
As long as the price is below 30.00, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 27.54
- Take Profit 1: 25.00
- Take Profit 2: 20.00
Alternative scenario:
If the level of 30.00 is broken-out, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 30.00
- Take Profit 1: 32.00
- Take Profit 2: 34.00
