Amid the start of the COVID-19 pandemic, big pharma companies like Pfizer (PFE 0.85%) began expedited clinical trials of COVID-19 vaccines and antiviral treatments. And a combination of incredible mobilization on the part of Pfizer and this public health emergency resulted in massive business opportunities for the company.

The Comirnaty COVID-19 vaccine co-owned with BioNTech became the best-selling pharmaceutical product of all time for a single year, topping $40 billion in revenue for 2022. And the anti-viral treatment Paxlovid wasn't far behind at $19 billion.

But now with the World Health Organization recently declaring an end to COVID-19 as a global health emergency, the real questions are as follows: Can Pfizer maintain its business momentum over the long run? And is the stock a buy for income investors? Let's look at Pfizer's fundamentals and valuation to decide.

A decent quarter for the circumstances

Pfizer's revenue fell 28.8% year over year to $18.3 billion in the first quarter. This may seem to be an undesirable result on the surface, but it's not so bad upon further examination. For one thing, the abnormally strong U.S. dollar weighed on revenue to the tune of 3%.

Pfizer's combined Comirnaty and Pavlovid COVID-19 revenue also plunged 51.5% over the year-ago period to $7.1 billion during the first quarter. Healthy demand for the company's anti-viral treatment couldn't offset the tremendous drop in demand for COVID-19 vaccines that has taken hold in recent quarters.

But outside of Pfizer's COVID-19 product lineup, its non-COVID revenue grew at a 5% clip, adjusting for unfavorable foreign currency translation for the first quarter (i.e., operational revenue growth). These robust results were driven by single-digit to double-digit revenue growth from five products that are on pace to be blockbusters in 2023 (e.g., at least $1 billion in revenue). These include the rare heart disease Vyndaqel franchise, the Eliquis blood thinner co-owned with Bristol Myers Squibb, and the Prevnar vaccine franchise.

Pfizer's non-GAAP (adjusted) diluted earnings per share (EPS) declined 24.1% year over year to $1.62 in the first quarter. Tight cost management helped the company improve its non-GAAP net margin by 210 basis points to 38.5% during the quarter. This explains how Pfizer's adjusted diluted EPS contracted at a lesser rate than revenue for the quarter.

Healthcare professionals talking to each other.

Image source: Getty Images.

Pfizer's rebound may not be far away

Pfizer knew all along that its COVID-19 suite of products wouldn't haul in outsized revenue forever. This is precisely why the company has been on an acquisition spree, most notably with its $43 billion acquisition of the oncology company Seagen, announced in March. Pfizer anticipates that this acquisition alone could add $10 billion to its topline annually by 2030.

The company is also aggressively investing in research and development (R&D) to fund nearly 90 projects in its pipeline as of May 2. Pfizer allocated $2.5 billion in the first quarter alone to R&D, which equates to nearly 14% of its total revenue.

The market-topping payout is safe

When compared to the S&P 500 index's 1.6% dividend yield, Pfizer's 4.5% yield is immensely attractive to income investors. And this payout also appears to be sustainable.

This is because Pfizer's dividend payout ratio is positioned to clock in at just above 49% in 2023. Such a modest payout ratio allows the company to retain the capital necessary for future acquisitions, debt reduction, and share buybacks.

A dirt-cheap stock

The market has been quite impatient with Pfizer in the past 12 months, sending shares of the stock tumbling by 29% during that time. Pfizer's forward price-to-earnings (P/E) ratio is just 10.4, which is significantly less than the drug manufacturer industry average forward P/E ratio of 13.1. But for investors with the patience to wait out the company's recovery a few years down the road, the stock is a no-brainer buy.