You might call it a "Pfizzle."
In late 2021, Pfizer (PFE 0.55%) stock was at an all-time high. The company had pulled off a near miracle with its rapid development of a COVID-19 vaccine.
It followed that success with the launch of an effective oral COVID pill. Both became megablockbusters, with the vaccine (Comirnaty) generating global sales of $37.8 billion and the antiviral therapy (Paxlovid) raking in an additional $18.9 billion in 2022.
It's a much different story today. Pfizer has lost more than half of its market cap since hitting that record high. Sales of Comirnaty and Paxlovid are tanking.
Many investors seem to have thrown in the towel on the once high-flying pharma stock. But could Pfizer be a no-brainer stock to buy right now, even if its COVID sales continue to plunge?
How low can Pfizer's COVID revenue go?
There's perhaps no sadder picture for Pfizer (other than its stock chart) than the sales trajectory for Comirnaty and Paxlovid. It wasn't long ago that the two products generated combined sales of more than $56.7 billion. Pfizer expects its total COVID sales to be only around $12.5 billion in 2023.
Data source: Pfizer. Chart by author.
But the picture seems likely to get even worse in 2024. Pfizer projects combined sales of Comirnaty and Paxlovid will be only around $8 billion. The good news for the company is that's still a sizable amount of money. The bad news is that it's a far cry from the ginormous sales made in 2022.
Just how low can Pfizer's COVID sales go? It wouldn't be shocking for the sales of Comirnaty and Paxlovid to slip below $8 billion after 2024. However, I don't think that Pfizer's COVID sales will evaporate altogether.
COVID isn't going away. CEO Albert Bourla stated in the company's third-quarter conference call that he thinks there will be "stable COVID revenues going forward." If he's right, Pfizer should be able to count on billions of dollars annually from its COVID franchise for years to come.
Pfizer's worst-case scenario valuation
Let's assume, though, that Pfizer won't be able to rely on any COVID revenue at all beyond 2024. How would this worst-case scenario impact the stock's valuation?
It's hard to use earnings-based valuation metrics in our analysis because Pfizer doesn't release profitability data at a product level. However, we can easily use sales-based valuation metrics.
Pfizer's shares currently trade at a trailing-12-month price-to-sales (P/S) ratio of 2.37. Based on the company's guidance for 2024, the stock's forward P/S multiple is roughly 2.67 (using the midpoint of the guidance range).
If we backed out all of Pfizer's projected COVID sales, its revenue would be in the ballpark of $52 billion next year. That would give the stock a forward P/S ratio of around 3.08, excluding COVID altogether. Even if Pfizer doesn't generate one penny in COVID sales in 2024, its stock appears to be dirt cheap, compared to other big biopharma stocks.
Data source: Yahoo! Finance. Chart by author.
Eli Lilly and Novo Nordisk are outliers on the above chart for a good reason: The robust sales growth for the companies' weight loss drugs should continue for years to come. But even if we exclude Lilly and Novo, Pfizer looks considerably cheaper than its other peers.
Is Pfizer a no-brainer stock to buy right now?
There's no question that Pfizer's COVID products won't be its crown jewels going forward. However, the company expects to launch a combo COVID-flu vaccine in 2025 that could revive the franchise somewhat.
More importantly, Pfizer has plenty of other growth drivers. Its respiratory syncytial virus (RSV) vaccine Abrysvo is off to a great start. Sales for migraine drugs Nurtec and Vydura continue to soar.
Pfizer expects to add $20 billion in new revenue by 2030 from new drugs and new indications for existing drugs. It hopes to supplement that amount with another $25 billion in revenue by 2030 from business development deals. Notably, these numbers don't include any sales from Pfizer's experimental oral weight loss drug danuglipron, which flopped in a late-stage study.
Still, growth investors will probably find other stocks more attractive than Pfizer. Even factoring out the drag from its COVID products, the company won't generate jaw-dropping growth.
On the other hand, I think that Pfizer is a no-brainer stock to buy right now for two types of investors. Income investors should love the company's dividend yield of over 5.9%. Value investors should salivate at Pfizer's bargain-basement price.
Pfizer stock has admittedly "Pfizzled" quite a bit lately, but it could be a "Pfabulous" pick for some investors.
