Pfizer (NYSE:PFE), the developer of the top-selling COVID-19 vaccine in the world known as Comirnaty alongside its German partner BioNTech (NASDAQ:BNTX),  has performed very well this year. In fact, Pfizer's stock is up 47% so far this year, which is significantly higher than the S&P 500's 24% appreciation year to date.

This raises the following question: Is Pfizer's stock still a buy or has the stock gone up too far, too fast?

Doctor giving patient an injection.

Image source: Getty Images.

Pfizer's best days still lie ahead

Pfizer reported earlier this month that it generated $24.1 billion in revenue during the third quarter, which represents an astonishing 134.4% growth rate compared to the year-ago period. Even when excluding the $13 billion in net Comirnaty sales after Pfizer's split with BioNTech, the company reported 8.2% year-over-year growth in its non-Comirnaty portfolio in the quarter. This is what enabled Pfizer to beat analysts' average revenue estimate of $22.8 billion by 5.6% during the third quarter. Three drugs within Pfizer's non-Comirnaty portfolio accounted for a plurality of the company's revenue growth in the quarter.

Leading the pack was the blockbuster anticoagulant that is shared with Bristol Myers Squibb (NYSE:BMY) known as Eliquis. Pfizer's net revenue from the drug grew 20.8% year over year to $1.3 billion during the third quarter, which was the result of market share gains in the oral anticoagulant market, according to the company. Eliquis comprised 27.6% of Pfizer's year-over-year non-Comirnaty revenue growth in the quarter.

The other major contributors to Pfizer's non-Comirnaty revenue growth during the third quarter were the rare heart disease drugs Vyndaqel and Vyndamax. As a result of continued adoption of the drugs in treating a rare type of heart disease in the U.S., developed Europe, and Japan, revenue soared 42.7% year over year to $501 million in the quarter. These two drugs contributed to another 17.9% of Pfizer's year-over-year non-Comirnaty revenue growth during the third quarter.

Moving down the income statement, Pfizer's non-GAAP (adjusted) earnings per share (EPS) rocketed 129% higher compared to the year-ago period. This was the result of a substantially higher revenue base and a 20-basis-point drop in Pfizer's adjusted net margin to 31.9%. These factors allowed Pfizer to absolutely crush analysts' average adjusted EPS forecast of $1.08 by 24.1% in the quarter. 

And as if Pfizer's most recent outlook for $81 billion to $82 billion in total revenue for this year wasn't enough, there's a good chance that Pfizer will surpass the milestone $100 billion mark in revenue next year. Pfizer expects that its net sales from Comirnaty will drop from $36 billion this year to $29 billion next year. But an analyst from an investment bank specializing in healthcare known as SVB Leerink believes that Pfizer's oral COVID drug Paxlovid will more than make up the decline in Comirnaty.

SVB Leerink's Geoffrey Porges forecasts that Paxlovid itself will be nearly as big as Comirnaty -- generating $24.2 billion in total revenue next year. This sales estimate is based on the $5.3 billion that the U.S. Government paid to secure 10 million doses ahead of the anticipated emergency use authorization (EUA), as well as the assumption that other developed nations will follow in the months ahead.

In other words, Pfizer doesn't look like it will be surrendering its dominance in fighting COVID-19 anytime soon. And that bodes very well for shareholders.

Buoyed by marvelous solvency

Pfizer's future outlook isn't the only thing to love about the stock. Pfizer's interest coverage ratio suggests there is almost no scenario that could bankrupt the company. For those who are unaware, the interest coverage ratio is a measure of how many times over a company can pay its interest expenses from earnings before interest and taxes (EBIT). The company's interest coverage ratio more than tripled, from 7.2 through the first nine months of last year ($7.47 billion in EBIT/$1.03 billion in interest costs) to 22.1 in the first nine months of this year ($21.08 billion in EBIT/$954 million in interest expenses).

Pfizer remains an income investor's dream

Based on Pfizer's outlook for $4.16 in midpoint adjusted EPS this year and dividends per share of $1.56 that will be paid this year, the company's dividend payout ratio will be around 37.5% for this year. Pfizer's 3.1% dividend yield is safe and much higher than the S&P 500's sub-1.3% yield. 

Given Pfizer's combination of a low payout ratio and the potential for next year to be better than this year, some investors anticipate that a double-digit hike in the stock's dividend could be announced as early as next month. A market-beating yield and the possibility of strong dividend growth are why Pfizer remains a great pick for income investors. And investors can pick up shares of the stock at just 12 times next year's earnings, which is why Pfizer is still a buy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.