In the world of big pharmaceutical companies, Pfizer (PFE -2.32%) stock has been a notable laggard over the past few years. It was something of a surprise, then, when it outperformed many of its peers by racing nearly 14% higher over the course of last month. A better-than-expected quarterly earnings report had something to do with that, as did several regulatory advancements.
2 beats and 1 raise
The first significant stock-moving event for Pfizer that month was the release of its second-quarter earnings report on Aug. 4. Revenue for the pharmaceutical giant rose by 3% to $15 billion, while net income not under generally accepted accounting principles (non-GAAP, or adjusted) was up marginally to $4.4 billion, or $0.77 per share.
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Those growth rates might not be explosive, but they were higher than what analysts tracking the stock were expecting. The consensus pundit estimate for revenue was $14.4 billion, while that for adjusted earnings per share (EPS) was only $0.68 per share.
Compounding that pair of beats, Pfizer raised the low end of its full-year revenue guidance range, as it increased its sales estimate for non-COVID products but decreased its forecast for those goods. The new revenue projection is $60.5 billion to $62.5 billion, up from the previous $59.5 billion to $62.5 billion. However, the company didn't change its $2.80 to $3 adjusted EPS guidance.
Pfizer's No. 1 drug, the anticoagulant Eliquis, was again the motor of its growth; its sales grew by a sturdy 19% year over year in the quarter. The big caveat in that otherwise impressive performance is that Eliquis will soon fall off the dreaded patent cliff and face competition from generic versions made by rivals.
This is why Pfizer has been loading up on acquisitions over the past few years and aggressively advancing its development programs. The latter is usually not a quick process; however, it can reward investors with a relatively long-term horizon.
In August, the company scored a regulatory victory when the European Medicines Agency (EMA), the 27-member European Union's regulator, validated the application for PF-07307405. This is a next-generation treatment for Lyme disease being developed by Pfizer and its partner Valneva.
And on our shores, toward the end of the month, the U.S. Food and Drug Administration (FDA) approved a supplemental biologics license application (BLA) for the latest version of its durable COVID vaccine Comirnaty developed with its biotech peer BioNTech.
NYSE: PFE
Key Data Points
Blockbuster or bust
I feel the market is underestimating Pfizer as, for many, the company's status as a pandemic-era star (with Comirnaty) is still fresh in their minds. Since then, it hasn't produced a new blockbuster product, and investors are getting impatient.
Those willing to wait should be rewarded, I believe. Pfizer's acquisitions haven't come cheap, by and large, but they've given the company a set of highly promising assets. The pipeline is now extremely wide and varied, and very likely to produce a top-selling medicine, perhaps even in the near future. This remains an undervalued stock to me, and one ripe for a buy.
