Trading at a bit under $25 apiece, Pfizer's (PFE 1.61%) shares appear tentatively cheap. However, the pharmaceutical giant reached these levels because it has faced significant headwinds, resulting in a poor stock market performance over the past three years.
Yet, what is the outlook for the struggling giant from here? Is Pfizer worth investing in at current levels?
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Slowly engineering a comeback
Pfizer's revenue and earnings have been inconsistent over the past few years. To make matters worse, the drugmaker will encounter important patent cliffs within a few years, including that of Eliquis, an anticoagulant and one of its best-selling drugs. Even so, the company has been gradually earning new approvals, some of which should have a meaningful impact on its financial results as label expansions are secured.
Further, Pfizer has doubled down on acquisitions, which has helped it improve its pipeline. The company now has a comprehensive list of candidates across multiple therapeutic areas, with a particular focus on cancer. It also boasts a promising candidate for weight loss. Pfizer should launch several new products that will bolster its lineup through the end of the decade.
NYSE: PFE
Key Data Points
Even more reasons to buy
Purchasing shares of top companies when they are down is a great way to earn excellent returns over the long run. Pfizer is a top pick to consider, given that it has been making the right moves to overcome slow (or non-existent) revenue growth and patent cliffs. And there are even more reasons to consider the stock. Here are three.
First, Pfizer penned a deal with the Trump administration that will allow it to avoid tariffs for three years. Second, the company is a solid dividend payer. It has increased its payouts by 51.3% over the past decade, and boasts a juicy forward yield of 6.9%.
Lastly, Pfizer is trading at 8.5 times forward earnings, much lower than the 18.4 healthcare sector average. All these make for compelling reasons to buy the stock.
