Pfizer Has Been a Mediocre Stock at Best. Here's Why You Should Consider Buying It Anyway

(NYSE: PFE) isn’t one of them.” data-reactid=”12″ type=”text”>The booming stock market recently hit an all-time high. Many stocks regained all of their losses from earlier in the year and skyrocketed a lot higher. But Pfizer (NYSE: PFE) isn’t one of them.

pharma stock anyway.” data-reactid=”14″ type=”text”>No investor likes mediocrity. And let’s face it: Pfizer has been a mediocre stock at best. But here’s why you should consider buying the big pharma stock anyway.

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Say goodbye to Upjohn and hello to stronger growth

second-quarter results.” data-reactid=”32″ type=”text”>What’s the primary source for Pfizer’s malaise? All you have to do is look at the company’s second-quarter results.

Pfizer reported a 3% year-over-year organic revenue decline in Q2. This slide stemmed mainly from the Upjohn unit, which saw sales plunge 31% from the prior-year period. The loss of patent exclusivity for Lyrica was the major culprit. The good news for Pfizer is that it will soon say goodbye to Upjohn and hello to stronger growth.

Keep in mind that Pfizer’s biopharma segment posted 6% year-over-year sales growth in the second quarter. And that’s with the COVID-19 pandemic disrupting the company’s business, especially in the U.S. market. 

stated in the company’s Q2 conference call that the company remains confident that it will be able to deliver annual revenue growth of at least 6% through 2025 after it spins off Upjohn and merges the unit with Mylan. This transaction is still on track to close in the fourth quarter of 2020.” data-reactid=”35″ type=”text”>Pfizer CEO Albert Bourla stated in the company’s Q2 conference call that the company remains confident that it will be able to deliver annual revenue growth of at least 6% through 2025 after it spins off Upjohn and merges the unit with Mylan. This transaction is still on track to close in the fourth quarter of 2020.

The big drugmaker should also be able to achieve average annual earnings growth roughly in line with its projected revenue growth. Granted, 6% earnings growth might not seem all that exciting. But it should be enough to close to the middle of the pack in the S&P 500. 

Pfizer isn’t in the middle of the pack, though, when it comes to dividends. The company is in the top quintile of S&P 500 stocks ranked on dividend yield. Its position shouldn’t slip too much after the Upjohn-Mylan deal wraps up. Increased revenue and earnings growth combined with a strong dividend should make Pfizer stock more appealing than it’s been in quite a while.

Near-term catalysts on the way

None of this is a secret. But what Pfizer needs to wake investors up to its soon-to-improve fortunes is a positive catalyst or two. The good news is that the company should have some catalysts on the way in the near term.

BioNTech. ” data-reactid=”41″ type=”text”>It seems likely that Pfizer could provide more good news related to its pipeline at the investor presentations scheduled for Sept. 14 and 15. But the biggest potential catalyst is the possibility of winning FDA emergency use authorization before the end of the year for BNT162b2, the COVID-19 vaccine candidate developed by Pfizer and BioNTech

enrolled over half of the targeted 30,000 patients for late-stage testing of BNT162b2. Bourla has publicly stated that he anticipates filing for FDA approval of the vaccine as early as October of this year.” data-reactid=”42″ type=”text”>Pfizer and BioNTech recently announced that they have enrolled over half of the targeted 30,000 patients for late-stage testing of BNT162b2. Bourla has publicly stated that he anticipates filing for FDA approval of the vaccine as early as October of this year.