With Pfizer (PFE +0.35%) stock hovering near a five-year low, one analyst has just started coverage of the pharmaceutical giant and is telling investors it's time to buy. In a report released last week, Guggenheim analyst Vamil Divan said he believes Pfizer is worth $36 per share. That would represent a gain of about 30% from Friday's closing price.
Pfizer's cash generated from operations soared during the COVID-19 pandemic, and its share price soared along with it. But Pfizer stock has dropped by more than 50% from its pandemic-era high as investors wondered if, and how, it could resume growth.
NYSE: PFE
Key Data Points
Breakthrough cancer treatments
Guggenheim's Divan thinks the company does have a path back to growth though. He believes that near-term financial estimates for the company could be too conservative as it commercializes treatments for cancer and respiratory syncytial virus, more commonly known as RSV.
Pfizer completed its $43 billion acquisition of oncology company Seagen in December 2023. The company says that the acquisition has now doubled its oncology pipeline. Investors seeking growth from Pfizer need to focus on that area. But one can own Pfizer stock without it being considered a growth stock.
Passive income
Income investors should be looking hard at owning Pfizer shares right now. With shares historically low, the stock's dividend was recently yielding nearly 6%. That means as long as the business maintains its level of cash and income generation, investors can expect this high level of passive income to continue.
Over the past five years, Pfizer's dividend yield has averaged slightly under 4%. So its current yield is significantly higher from that perspective. Income investors can be happy owning Pfizer now, even if analysts like Divan are ultimately wrong about the resumption of growth.
