Please ensure Javascript is enabled for purposes of website accessibility

Why Pfizer Stock Tanked in February

By George Budwell - Mar 4, 2020 at 9:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Pfizer's various commercial links to China weighed on its shares last month.

What happened

Shares of the multinational pharmaceutical giant Pfizer (PFE 3.59%) 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 woman sitting on a chair with question marks over her head, and a red arrow indicating a downward trend.

Image source: Getty Images.

So what

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.   

Now what

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. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pfizer Inc. Stock Quote
Pfizer Inc.
$52.47 (3.59%) $1.82
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,354.62 (-0.30%) $-33.88
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,901.36 (0.01%) $0.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.