Pfizer just raised its dividend by 2.4% to $0.43, giving investors something to cheer about despite the stock’s lackluster performance lately. It is down 13% YTD and 30% in the last 5 years. The stock even missed the weight loss drugs craze as the company doesn’t make such medicine. Amidst this gloom, new investors continue to find the stock attractive. Thanks to the dividend raise, the forward dividend yield stands at 6.7%, something that can’t be ignored for a strong company like Pfizer.
Pfizer Inc. is a leading global biopharmaceutical company that discovers, manufactures, and commercializes various medicines and vaccines. The company had a great impact during the pandemic thanks to using mRNA technology to develop its COVID-19 vaccine, which dominates the market with over 2.5 billion doses.
Since it was founded, in 1849, the company has made significant contributions to the pharmaceutical industry including supplying morphine and iodine to the Union Army during the Civil War; supplying 90% of the penicillin used by U.S. forces during the Normandy invasion; and the introduction of Viagra in 1998.
Currently, Eliquis is the major contributor to total revenue, representing approximately 22% of Pfizer’s total revenue. This anticoagulant reduces the risk of stroke and systemic embolism in patients with atrial fibrillation.
The COVID-19 vaccine, Comirnaty, and the antiviral treatment used to reduce severe outcomes from COVID-19, known as Paxlovid, together generate about 21% of total revenue.
Other relevant products are Prevnar 13, a pneumococcal vaccine; Ibrance, breast cancer treatment; and Vyndaqel/Vyndamax, which addresses a rare but serious heart condition.
The U.S. market accounts for approximately 52% of Pfizer’s total revenue, while Europe accounts for about 25%. Pfizer operates globally and its client base includes hospitals, government agencies, and NGOs which facilitate access to its medicines and vaccines.
Pfizer’s asset portfolio is impressive. Its vaccines are second to none, though one could argue that vaccines aren’t the most desirable product in a pharma company’s portfolio owing to a lack of pricing power. The company’s vaccination for Lyme disease, expected to be sent to regulators for approval in 2026, will further cement its place as a leader in the pharma industry.
The company’s Oncology revenues saw a 31% YoY increase, impressive for a company that is already the third largest by revenue in the US. On the financial front, strong earnings guidance for the next year is exciting investors, though the impact of this excitement is yet to be seen on the stock price.
If all is going so well for the company, why is it not reflected in the stock’s performance? The answer lies in the nature of the business and patent expiries. The company has had its fair share of controversies related to COVID-19 vaccines and is often facing tough scrutiny from regulators.
While the patent expiry issue applies to all pharma companies, Pfizer spends $10 billion a year on R&D, which means there are millions of dollars wasted every year on products that never see the light of day. This expenditure weighs down on the stock and the market starts giving a lower PE multiple. But for those investors who believe the company’s R&D will come through and new products will eventually become a part of its product portfolio, the stock might be too cheap to ignore.
Pfizer does not rank on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 80 hedge fund portfolios held PFE at the end of the third quarter which was 84 in the previous quarter. While we acknowledge the potential of PFE as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as PFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.