Is now the time to buy Pfizer shares?
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Year-to-date Pfizer (NYSE:PFE) shares have risen by over 26%. By comparison, the Dow Jones return for the same period is about 15%, NASDAQ has risen about 17%, while the S&P 500 has returned about 20%. Clearly, the Pfizer shares price have outperformed the trio of indices. But is the growth of the Pfizer stock backed by the fundamentals? And is it time to buy Pfizer shares? Let’s find out.
In late August, the Food and Drug Administration (FDA) recently approved Pfizer and BioNTech’s Covid vaccine. This news sent Pfizer and BioNTech share prices higher.
With this approval, the vaccine will now be marketed as Comirnaty. While granting the approval, the FDA observed the vaccine was 91% effective in preventing the Covid disease.
Besides this, the company announced that it has agreed to acquire Trillium Therapeutics – a clinical-stage immuno-oncology company in a $2.26bn deal. Pfizer expects to use this acquisition to add two leading molecules in developing a treatment for haematological malignancies (blood, bone marrow, and lymph node cancers) to its oncology pipeline.
I think if this deal goes through, it should bring in more revenue to the company and place it in a better competitive position. Needless to say, it should push Pfizer share price to new highs.
Do the fundamentals support the Pfizer share price surge?
The leading multinational pharmaceutical and biotech company has had a stellar performance this year. In both the Q1 and Q2 results, it beat market expectations. In the first quarter, it reported a 20% earnings surprise after earnings-per-share (EPS) came in at $0.93. Meanwhile, revenue was also around 7% higher than expected and reached $14.58bn. For the second quarter, the EPS once again beat expectations at $1.07, as did revenues at $18.98B. Notably, the company raised FY 2021 revenue guidance to a range of $78bn-$80bn and adjusted EPS to $3.95-$4.00.
Considering this performance and the effectiveness of the company’s Covid-19 vaccine, I think Pfizer will still report strong growth in the next quarter and beyond, potentially taking the Pfizer share price even higher.
Risks that lie ahead
Pfizer’s business is conducted in an intensely regulated environment and is highly competitive. As a result, regulatory changes could affect the landscape of the company. R&D investments could go down the drain where the regulators fail to give final approval of products.
Aside from that, Pfizer competitors equally have strong drugs with similar results in the market. All these could affect the profit of the company. Consequently, investors may be disappointed if a rival treatment manages to outperform Pfizer’s products.
Final thoughts on Pfizer shares
Pfizer shares have performed in recent times. This surge is primarily lead by the success of the Pfizer-BioNTech Covid-19 vaccine. But with a vast pipeline of other products in the works, the company is by no means a one-trick pony. Therefore, despite the risks, I am considering adding this business to my portfolio.
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Covid-19 has devastated the global markets. But this stock has been thriving and has doubled its revenue for the last five years, even in 2020! What's more, due to the recent volatility in the stock market, The Money Cog analysts feel the stock is grossly undervalued.
Needless to say, I believe it's a fantastic business that could become an industry leader in the future!