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3 Reasons Pfizer Stock Will Crush the Broader Market in 2022

By George Budwell – Dec 1, 2021 at 10:00AM

Key Points

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This red-hot pharma is far from hitting a peak.

Pfizer (PFE 0.65%) has been the second-best-performing big pharma stock for the whole of 2021. As of the close of November, the shares were up by an astonishing 45.8% year to date, which is only slightly lower than Eli Lilly's industry-leading 47% gain in 2021.

Pfizer's shares have soared this year due to its dominance in the COVID-19 vaccine market, as well as its late-stage trial success with the oral antiviral pill Paxlovid. In fact, the Pfizer and BioNTech COVID-19 vaccine Comirnaty will likely end 2021 as the best-selling pharmaceutical product of all time from a single-year standpoint. 

Despite this sizable jump in 2021, Pfizer seems primed to crush the broader market yet again in 2022. Here are three reasons this top pharmaceutical stock should deliver market-beating returns next year. 

A happy business person pointing upwards with a wooden , upward pointing arrow, in the background.

Image source: Getty Images.

1. COVID product sales will be off the charts in 2022

Comirnaty is slated to haul in no less than $36 billion in sales in 2021. To put this eye-popping revenue figure into perspective, AbbVie's Humira, which was the best-selling pharma product last year, generated $20.4 billion in sales in 2020.

During Pfizer's third-quarter earnings presentation, management said that Comirnaty is already on track to rake in $29 billion in sales in 2022. This mid-October sales forecast, however, was before the omicron variant made an appearance on the global stage.

With demand for COVID vaccines likely to remain at fever pitch next year and Pfizer/BioNtech already hard at work designing an omicron-specific formulation, this dynamic duo might post another year of record-breaking vaccine sales in 2022. At a minimum, though, Comirnaty (or an iteration for the omicron variant) ought to easily break $30 billion in sales next year. 

While its vaccine sales should continue to be stellar in 2022, the company will almost certainly get another major boost from its oral coronavirus pill Paxlovid. Pfizer, in fact, ought to end up dominating this segment of the coronavirus pharma market as well.

If true, the drugmaker could very well book upward of $24 billion in Paxlovid sales in 2022. That's an astonishing revenue forecast from a historical perspective.   

2. Pfizer will execute multiple business development deals 

Last August, Pfizer hired Aamir Malik from McKinsey & Company to fill the role of chief business innovation officer. Malik has played a key role in numerous healthcare mergers and acquisitions over the past two decades.

And since onboarding Malik, Pfizer's brain trust has openly admitted that it is on the hunt for intriguing phase 2 and phase 3 assets to keep the growth train rolling in the second half of the decade. So, with nearly $30 billion already in the bank and more on the way, shareholders can probably expect the company to pursue a handful of in-licensing deals, multiple bolt-on acquisitions, and maybe even a megamerger.

While the company hasn't seemed inclined to go the megamerger route since its failed pursuit of Allergan a few years back, there are some good reasons to believe that one may be close at hand. Most importantly, Pfizer's COVID franchise will leave a huge hole to fill once the pandemic ends. And the only clear way to make up for this future shortfall is through a major acquisition. Matter of fact, the cessation of the pandemic would leave a Gilead Sciences-sized hole in its revenue stream. 

All told, Pfizer is poised to tack on several additional pipeline assets and quite possibly a few revenue-enerating products to its portfolio next year. These upcoming business development deals should help shore up the drugmaker's long-term outlook. 

3. Pfizer's top shareholder reward program will get even stronger

Pfizer's stock presently comes with a 3% annualized dividend yield, which is slightly above average for its peer group. However, the drugmaker's trailing-12-month payout ratio of 45% and rapidly growing top line seem to indicate that a major boost to its dividend is on the way.

On top of its strong dividend program, the company also has over $5 billion remaining under its current share repurchase program. Although the drugmaker didn't tap this program in 2021, it can definitely afford to do so in 2022, thanks to its market-leading coronavirus franchise.  

George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends Gilead Sciences. The Motley Fool has a disclosure policy.

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