Just a couple of years ago, Pfizer's (PFE 2.64%) revenue was soaring thanks to sales of its coronavirus vaccine. In fact, the vaccine became the world's best-selling pharmaceutical product and even helped Pfizer reach a record of more than $100 billion in annual revenue.
But in recent times, as demand for the vaccine waned, the company found itself at a transition point. Pfizer had to revamp its cost structure, considering the lower demand for the vaccine, and the company shifted focus to product launches outside of the coronavirus space and its acquisition of oncology specialist Seagen to drive a new era of growth. Meanwhile, Pfizer's shares continued to disappoint investors, slipping 48% from a high in late 2021 through the end of last year.
This year, though, has brought progress, and investors are taking notice. The stock has climbed more than 20% over the past three months, and just this week during Pfizer's earnings report, the company said it did one particular thing for the first time in six quarters -- something that should add to investor optimism. Does this make Pfizer a buy right now? Let's find out.
Image source: Getty Images.
The Pfizer story so far
As mentioned, just a few years ago, Pfizer's revenue growth was on fire thanks to its coronavirus vaccine. But demand for this product, and for Pfizer's blockbuster coronavirus treatment, declined, weighing significantly on growth. At the same time, the company faced a number of losses of exclusivity for older blockbuster drugs in other treatment areas. Pfizer expected this and focused its attention on research and development and acquisitions to build up its product offerings.
The result was its biggest period of product launches ever -- 19 new products over a period of about 18 months. 15 of those products came from the internal pipeline, and the rest came from business deals. Speaking of business deals, Pfizer acquired Seagen as part of an effort to become a cancer drug powerhouse over the long term.
Of course, it will take time for all these efforts to reach their full potential, but Pfizer is already starting to show progress. This brings me to the thing that Pfizer did for the first time in several quarters. In the second quarter of this year, Pfizer reported an increase in revenue year over year. The last time this happened was in the fourth quarter of 2022, when coronavirus vaccine revenue peaked.
Q2 revenue advanced 3% to $13.3 billion -- and rose 14% when excluding contributions of the company's coronavirus vaccine and treatment. This performance was driven by double-digit growth for cardiomyopathy treatment Vyndaqel, oncology drug Xtandi, and migraine treatment Nurtec. Products acquired from Seagen also added to growth in the quarter, the company said.
NYSE: PFE
Key Data Points
Progress with new products
Pfizer also said it's making progress with its launches and new products. For example, the company is seeing high demand for alopecia drug Litfulo, launched last year. Pfizer says one of every two new patients on advanced therapies has received a prescription for the drug.
All this prompted Pfizer to lift its full-year revenue guidance range by $1 billion and its adjusted diluted earnings per share (EPS) forecast by 30 cents. The company now predicts revenue in the range of $59.5 billion to $62.5 billion and EPS between $2.45 to $2.65.
Now let's get back to our question: Is it time to buy Pfizer? It will take time for Pfizer to generate growth from its enormous wave of product launches, so we can't expect revenue to suddenly take off. But the number of new launches, the potential of the oncology business, and sales from Pfizer's older products that are still delivering growth should keep this pharma giant moving in the right direction. On top of this, Pfizer is progressing with its efforts to trim down expenses. It's set to deliver at least $4 billion in cost savings by the end of the year.
A look at valuation shows Pfizer trades for 12x forward earnings estimates, which looks very reasonable considering the number of new products that could generate growth down the road. All this means Pfizer is a great buy for patient investors who are ready to invest now -- and potentially benefit from a successful growth story over time.
