Historically, Pfizer (PFE 1.00%) hasn't been a big mover when it comes to stock performance. Over the past 10 years, the S&P 500 Index has outperformed this big pharma company. But momentum is picking up for Pfizer. Last year, it beat the benchmark index -- Pfizer climbed 60%, while the S&P 500 advanced 27%.
And the Pfizer of today doesn't look a lot like the Pfizer of a few years ago. The company in 2020 completed a spinoff of its Upjohn business -- removing an element that had been weighing down revenue. Today, Pfizer has many blockbusters, a new coronavirus treatment on the market, and a full pipeline. So, should you invest in this drugmaker in 2022?
image source: Getty Images.
The coronavirus business
First, let's take a look at the coronavirus business. Pfizer is the leading vaccine provider in many parts of the world. In the U.S., the company has fully vaccinated more than 118 million people. But the Pfizer vaccine actually is even bigger abroad. The company says it's generated 75% of its vaccine revenue outside of the U.S.
The European Union recently exercised an option for the delivery of more Pfizer vaccines -- bringing the total number to more than 650 million Pfizer doses to be delivered this year. The full agreement, signed last spring, includes as many as 1.8 billion doses for the region through 2023.
In Pfizer's most recent earnings report, the company forecast vaccine revenue of $36 billion for the 2021 full year.
But this year may be even stronger for Pfizer than last year. Here's why. Vaccine orders remain high -- but they're also joined by a new coronavirus product. Pfizer won Emergency Use Authorization late last year for Paxlovid, its oral coronavirus treatment. Paxlovid is a pill to be given at the first signs of infection. The drug's main ingredient blocks the action of an enzyme needed in the coronavirus' replication process.
More than $50 billion in revenue
The U.S. has ordered 20 million Paxlovid treatment courses, and the U.K. has ordered 2.75 million. SVB Leerink analyst Geoffrey Porges predicts Paxlovid revenue of more than $24 billion and vaccine revenue of $29.7 billion this year, FiercePharma reported. This represents more than $50 billion in revenue from the coronavirus program alone.
Of course, investors' big concern here is about what will happen to that revenue in a post-pandemic world. It's not possible right now to predict precise revenue levels for the coronavirus program well into the future. And that represents an uncertainty. Still, experts say the coronavirus will stick around. And that means we'll need protection and treatments. So, we probably can expect a satisfactory level of revenue from coronavirus products for quite some time.
But here's the best news: Pfizer is far from being a coronavirus-only company. The company's nine-month revenue report shows at least six products with blockbuster revenue. And in the third quarter, the company said revenue excluding the coronavirus vaccine climbed 7% to more than $11 billion.
As if that wasn't good enough, Pfizer has something else to like. And that's the pipeline. It's working on 94 programs -- 29 of them are in phase 3 and nine are in the registration stage. That means we may see a new batch of products in the not-too-distant future. This is important since some of Pfizer's blockbusters will reach patent expiration later this decade. For instance, blood thinner Eliquis will lose protection in 2028. This is a standard part of life as a pharmaceutical company -- and that's why it's key to have a strong pipeline of products to compensate for patent expirations down the road.
A look at valuation
Now, let's look at valuation. As mentioned earlier, Pfizer's share price has picked up some speed. But it still is trading at very reasonable levels. It trades at only about 8.5 times forward earnings estimates. And Pfizer also pays a solid dividend -- with a yield of more than 2.8%.
So, should you invest in Pfizer in 2022? Well, right now looks like a great time to do just that. The company is generating billions of dollars in revenue from its coronavirus vaccine program. It has a portfolio of non-coronavirus blockbusters and a full late-stage pipeline. The shares look inexpensive -- and investment in this big pharma player will offer you the passive income of dividends. All of this makes a great formula for success this year -- and beyond.
