Shares of the multinational pharmaceutical giant Pfizer (PFE 0.76%) slid by a noteworthy 10.3% over the course of February, according to data from S&P Global Market Intelligence. The drugmaker's shares, in fact, fell harder and faster than the Dow Jones Industrial Average, the Nasdaq Composite, and the S&P 500 last month.
What sparked this dramatic downturn? Pfizer has strong commercial ties to China mainly through its Upjohn generic-drug business. Investors, therefore, appear to be concerned that the COVID-19 illness, which has fanned out across China since the start of the year, will have a negative impact on drug sales in this key emerging market, perhaps for the remainder of the year.
A slowdown in China will almost certainly show up in Pfizer's next earnings report, slated for late April or early May of this year. So investors should probably brace themselves for a fairly weak first-quarter earnings report in roughly two months' time. That said, this double-digit sell-off last month was arguably way overdone. Pfizer, in effect, lost around $23 billion in market capitalization last month -- a figure that will undoubtedly dwarf any lost revenue from the COVID-19 outbreak in China or elsewhere.
Should investors pounce on this beaten-down big pharma stock? The answer is a resounding yes. Pfizer offers investors a top-notch dividend, a strong balance sheet, one of the most robust clinical pipelines, and a well-rounded portfolio of new growth products. Put simply, Pfizer will be fine over the long term, even if the COVID-19 illness persists for the whole of 2020.