2023 was a great year for stocks generally, but not for all of them. Pfizer (NYSE:PFE) stock fell while the market obsessed over the so-called “Magnificent Seven” and over the new trend in weight-loss drugs. Now, however, it’s a new year and investors have a chance to buy PFE stock at an absurdly low price.
Whether you’re into value, dividends, or promising turnaround stories, Pfizer should be on your watch list. If you don’t act soon, you’ll wish you had capitalized on the opportunity to own Pfizer stock while it was still cheap and collect the quarterly dividend distributions along the way.
A Rough Year for PFE Stock
Suffice it to say, 2023 wasn’t a great year for Pfizer and its loyal shareholders. Pfizer stock slid almost nonstop throughout the year. Furthermore, after many consecutive profitable quarters in which Pfizer beat Wall Street’s consensus EPS estimates, the company posted an unprofitable third quarter of 2023 with an EPS estimate miss.
That’s a bitter pill to swallow, no doubt. On the other hand, there are silver linings to be found here. For one thing, after such a painful share-price drawdown, Pfizer’s GAAP trailing 12-month price-to-earnings (P/E) ratio is very reasonable at 15.65x. That’s half of the sector median P/E ratio of 32.94x.
Moreover, Pfizer pays a jaw-dropping forward dividend yield of 5.77%, versus the average healthcare sector dividend yield of around 1.5%. Hence, PFE stock should appeal to both value-hunters and passive-income investors.
Besides, Pfizer has a packed pipeline outside of obesity drugs. Particularly notable is Pfizer’s oncology division, which grew substantially when the company acquired Seagen. With access to Seagen’s cancer-fighting assets, Pfizer can boost its revenue-generating potential while also battling life-threatening diseases.
Pfizer Will ‘Play to Win’ in the Obesity-Drugs Market
It’s commendable that Pfizer is working diligently to fight cancer. However, Pfizer’s management surely knows that the company will also have to compete in the market for obesity drugs. It’s a hot market right now, and Pfizer can’t easily afford to get left behind.
Will Pfizer be able to catch up to Ozempic developer Novo Nordisk (NVO:NYSE) in the weight-loss drug category? Pfizer CEO Albert Bourla hasn’t given up hope.
“Pfizer’s position is that we believe obesity is a place that we have the ability to play and win. So we will have to play,” Bourla recently assured. It’s a bold statement, as it won’t be easy for Pfizer to play catch-up with Novo Nordisk in this niche pharmaceutical sector.
But then, maybe the pie is big enough for more than one drugmaker to take a big slice. According to Bourla (per Reuters), “some estimates for the eventual size of the obesity market had grown to $150 billion a year.” So, if the demand for obesity drugs outstrips the available supply in 2024, there might be room for multiple winners, including Pfizer.
Pfizer Stock Is Ready to Turn a Corner
Pfizer wasn’t constantly in the headlines last year. However, the company maintained a robust drug pipeline and is now well-positioned to ramp up its battle against cancer.
Plus, Pfizer never stopped rewarding its loyal shareholders with generous dividends, and the company might become a strong contender in the market for weight-loss drugs. Therefore, 2024 could be a great year for Pfizer and investors should think about buying PFE stock today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
