Interestingly, there are no Big Pharma companies listed in the “Magnificent Seven.” Consequently, perfectly good companies like Pfizer (NYSE:PFE) are being overlooked, but that’s not bad news at all. If you appreciate a good value and like to collect dividends, stick around as today’s Pfizer stock analysis will bring you a “magnificent” pick for 2024.
Now, I’m not going to claim that Pfizer is a problem-free company. It’s important to be aware of Pfizer’s challenges. However, without problems, there would be no cheap stocks and buy-the-dip opportunities. Keep that in mind when you’re evaluating Pfizer stock, and don’t be so focused on the “Magnificent Seven” that you miss out on underappreciated gems.
Why Did PFE Stock Lose So Much Value?
InvestorPlace contributor Chris Markoch succinctly summed up one of Pfizer’s major issues in 2023. Markoch observed that PFE stock “dropped over 35% as revenue from its Covid-19 products cratered.”
Clearly, it was a tough time to be a Big Pharma business in a post-Covid world. Furthermore, Pfizer CEO Albert Bourla acknowledged that the company’s respiratory syncytial virus (RSV) vaccine, Abrysvo, was a disappointment last year. Abrysvo only comprised around 35% of the RSV-drug market share in the U.S., a situation that Bourla found “very unacceptable.”
Here’s what I really like about the CEO’s attitude. He’s willing to accept responsibility and admit failures. You may have seen chief executives only act as cheerleaders, but Bourla didn’t fall into that trap. He’re his statement on this topic:
“Overall, Pfizer didn’t demonstrate that edge that we had as a commercial machine that used to be a well oiled machine that was very credible launching products and we took some measures to correct that.”
2024 Should Be a Better Year for Pfizer
Looking ahead to the remainder of this year, Bourla and Pfizer will focus on other potentially lucrative and lifesaving pharma fields. In particular, Pfizer will concentrate on cancer-fighting drugs since the company acquired Seagen (NASDAQ:SGEN) and therefore has access to treatments that target tumors.
Moreover, Pfizer will pivot to precision medicine while also competing in the red-hot market for weight-loss drugs. “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 assured. Pfizer may look like a latecomer in the obesity-drugs market, but remember that this is a pharmaceutical giant with plenty of capital to develop and commercialize novel treatments.
Investors will have to be patient if they plan to profit with Pfizer stock. It’s a great time to take a share position, though. Believe it or not, Pfizer’s GAAP trailing 12-month price-to-earnings (P/E) ratio is very reasonable at 15.45x, versus the sector median P/E ratio of 31.47x.
Pfizer Stock Analysis: Chill Out and Reinvest Those Dividends
Pfizer pays a forward dividend yield of 5.77%, which is much better than the average healthcare sector dividend yield of around 1.5%. That’s another reason to consider a share position, along with Pfizer’s great value proposition and potential turnaround story.
So, don’t be afraid to invest in the biggest of Big Pharma. Pfizer won’t be in the market’s doghouse forever, and Pfizer could succeed in 2024 with novel drugs outside of Covid-19 vaccines. Therefore, my Pfizer stock analysis recommends a buy-and-hold position and reinvesting the dividends for maximum returns over time.
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.
