What happened
Shares of pharma titan Pfizer (PFE -0.19%) were up by 2.24% on moderate volume as of 2:29 p.m. ET Wednesday afternoon. The drugmaker's stock is trending higher despite every major U.S. stock index being in the red today.
What's behind Pfizer's relative strength today? Earlier Wednesday, The Wall Street Journal published a column questioning whether investors have turned too bearish on COVID-19 vaccine-makers like Pfizer. Pfizer's shares have fallen by as much as 30% this year in response to the anticipated drop in sales for its COVID-19 vaccine Comirnaty and antiviral treatment Paxlovid.
So what
At peak bearishness, Pfizer's dividend yield hit a whopping 4.5% on an annualized basis. What's more, the drugmaker's stock has consistently been the cheapest -- based on multiple valuation metrics -- within its big pharma peer group in 2023.
The lowdown is that investors have assigned almost no value to Pfizer's internal pipeline activities or its $70 billion splurge on business development over the past two years. With strong candidates in high-value areas like obesity, cancer, immunology, and infectious diseases under development, this bearishness is almost certainly overdone at this point.
Now what
Is Pfizer's stock a table-pounding buy? The answer is most definitely a "yes." Pfizer sports a sky-high dividend yield for a megacap healthcare stock, its pipeline is vastly underappreciated, and it still has the financial firepower to pursue additional bolt-on acquisitions as opportunities arise.
