Pfizer (PFE 0.55%) released its earnings this month, and I was shocked that despite such a strong performance and outlook, investors still weren't thrilled with it. Although it hasn't been crashing, the stock has been falling since the release of the company's quarterly results last week.
Unfortunately, in a world where everything seems to depend on whether or not a company met analyst expectations, reporting strong numbers just isn't enough. The one number that struck me as the most impressive was the revenue Pfizer said it plans to collect from its COVID-19 vaccine and pill. At $54 billion in sales for 2022, the following charts help put into context how impressive that is.
Image source: Getty Images.
It's more than Pfizer's previous annual revenue
Pfizer's revenue just from its COVID-19 vaccine and pill will be more than the total revenue the company has generated in any of its previous years. In the past, I wondered how the company might make up for lost revenue from the spinoff of its Upjohn segment, which contained its off-patent drugs and is now part of Viatris.
While there was an initial dip in revenue for 2020, things changed once Pfizer started generating meaningful revenue from its COVID-19 vaccine. Now, a segment of its business that didn't even exist a few years ago will generate more in revenue than the entire company did in 2020. All combined, Pfizer's total revenue could top more than $100 billion this year, up from $81 billion in 2021.
Source: Company filings. Table by author.
Many countries don't generate as much
Top countries in Europe and South America don't generate as much in total gross domestic product (GDP) as Pfizer is expected to from its COVID-19 business this year. Below is how Pfizer's predicted 2022 sales from COVID-19 compare with some of them (the GDP numbers are from 2017):
Source: Worldmeters.info. Table by author.
All of the above countries have populations between 2 million and 9 million people. They aren't anywhere near the largest in the world, but they aren't minnows, either.
Some emerging industries are still well below $54 billion
An industry's sales numbers include all revenue from all of its participants. Even here, there are some notable sectors that Pfizer's COVID-19 revenue would eclipse if they remain at the 2021 levels.
Sources: Fortune Business Insights, American Pet Products Association, Front Office Sports, Prohibition Partners, Grand View Research. Table by author.
If you include all of Pfizer's revenue, it would come close to the size of the entire U.S. pet market in 2021 -- but still nowhere near the electrical vehicle one. But even the COVID-19 business on its own, at an expected $54 billion, would be slightly ahead of where the U.S. sports betting market was worth last year at just under $53 billion and well above the cannabis industry, which came in at about $37 billion.
Are investors missing out on a golden opportunity?
Pfizer isn't the largest company in the world by any stretch. There are businesses that make more money, including big names like Apple and Walmart. But when you compare Pfizer to some of those behemoths, you start to realize how incredibly cheap it is when looking at their forward earnings multiples:
PFE PE Ratio (Forward) data by YCharts
The counterargument is that Pfizer's COVID-19 revenue likely won't last for the long term. But with the windfall of cash the company will generate from it, the business will be in excellent shape to spend money on its pipeline, acquisitions, or wherever it chooses to do so. Although its vaccine was the star of the show in 2021, Pfizer did generate sales growth in its oncology, internal medicine, rare disease, and hospital segments last year.
So this isn't just a COVID-19 stock. Pfizer has proven that it can innovate relatively quickly and dominate a sector. Armed with another year of strong results, thanks in large part to COVID-19 revenue, Pfizer will be in an excellent position to further expand its business in the near future.
This is an incredibly underrated stock that has loads of potential. It also pays a dividend yield of 3.2%, well above the S&P 500 average of 1.3%. It's a safe buy, and the healthcare stock could generate significant returns for investors for many years.
