As one of the world's most discussed businesses, Pfizer (PFE 0.55%) needs little introduction. Thanks to sales of its coronavirus vaccine, Comirnaty, and its antiviral drug for coronavirus infections, Paxlovid, Pfizer's top line has positively exploded, with its trailing 12-month revenue popping by more than 99% over the last three years, reaching a total of $81.2 billion.
But smart investors probably don't rate the chances of it repeating that performance very highly over the next three years. Still, there is (at least) one factor that might encourage them to hold on to their shares anyway. Let's investigate.
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1. Revenue is likely to recede in the next few years
As the pandemic (hopefully) resides in the near future, demand for Paxlovid and Comirnaty will start to fall off too.
And that's why smart investors will recognize the importance of this chart, derived from a composite of professional analysts' estimates.
PFE Annual Revenue Estimates data by YCharts
In a nutshell, the company is anticipated to bring in even more revenue next year than it did in 2021 -- and maybe even more than this year's projected sum of up to $102 billion -- but that's expected to be the high-water mark for a while.
This is, of course, unless the ongoing need for its coronavirus medicines ends up being higher or more persistent than expected, which could result in another run of tremendous growth. At this point, however, the best approach is to assume that the heyday of coronavirus product sales will eventually come to an end.
2. Its share of the global prescription drug market may shrink
As a major pharmaceutical business, Pfizer doesn't make medicines in a vacuum. Its competitors often develop products that target the same conditions as Pfizer's drugs, which leads to a fight for market share.
And canny investors understand that its presence in the global drug market is slated to become less powerful over the next few years, as seen in the chart.
The drop in market share might put the company in a slightly weaker position when it comes to attracting talent or financing acquisitions, but it probably isn't an existential threat.
Nonetheless, smart investors also know that it's entirely possible for shareholders to get what they're looking for out of their investment, regardless of this trend. After all, earnings (and share prices) can continue to grow, even if competing companies are expanding their prescription drug revenue faster.
3. The dividend will keep growing
While it isn't exactly the company with the fastest-growing dividend payout, smart investors doubtlessly factor in Pfizer's rising dividend when they're evaluating the stock.
Over the last three years, its payment has risen by 11.1%, reaching $1.56 on an annual basis as of its latest distribution.
And, given that its annual free cash flow (FCF) has risen by 183% since the start of 2020, there's little reason to suspect that management will find cause to stop hiking the dividend anytime soon.
But smart investors also know that the tiny bumps preferred by management aren't going to get them rich anytime soon, so be sure to keep things in perspective. On the other hand, slow and steady wins the race in the sense that Pfizer can likely continue to raise its payment even when facing the other two (largely detrimental) trends discussed here.
So in the long run, investors should continue to get mileage out of their shares in Pfizer.
