Pfizer (NYSE: PFE) recently announced its Q1 results, surpassing street estimates with revenues of $14.9 billion and an adjusted profit of $0.82 per share. Despite a decline in sales due to lower demand for Covid-19 products, Pfizer’s stock performance has been somewhat volatile, with a 15% decline from early January 2021 to around $30 currently. The company has struggled to consistently outperform the S&P 500 in recent years, underperforming in 2023. However, the Trefis High Quality Portfolio has managed to outperform the benchmark index annually during the same period.
Given the uncertain macroeconomic environment with high oil prices and elevated interest rates, investors wonder whether Pfizer will continue to underperform the S&P 500 in the coming months or stage a recovery. From a valuation perspective, PFE stock appears to be appropriately priced at around $28, close to Trefis’ estimate of $29 per share based on a 13x P/E multiple and expected earnings of $2.25 per share for the full year 2024. Pfizer’s revenue in Q1 saw a 19% decline year-over-year, mainly due to lower sales of Covid-19 products. However, excluding these products, sales grew by 11%.
Looking ahead, Pfizer forecasts its 2024 sales to be between $58.5 billion and $61.5 billion and expects adjusted earnings per share to be in the range of $2.15 to $2.35, compared to $1.84 in 2023. Despite the positive impact of the Seagen acquisition, Pfizer’s stock remains appropriately priced around $28, trading at 12x forward earnings, slightly below the 15x average over the past five years. This slight decline in valuation multiple aligns with the significant decrease in sales due to lower demand for Covid-19 products.
While Pfizer’s stock may seem fully valued, it’s important to compare it with its peers across industries using metrics that matter. Investors can find valuable comparisons for companies at Peer Comparisons. Overall, Pfizer’s recent performance, outlook, and valuation indicate that its stock is appropriately priced at current levels, with potential for further growth depending on the company’s ability to rebound from the sales decline and capitalize on opportunities in the healthcare sector. Investors should keep an eye on Pfizer’s future performance and strategic initiatives.
