Pfizer shares offer buying opportunities

For the shareholders of the multinational biotech giant Pfizer Inc. NYSE:PFE, it might seem like the stock’s all-time highs set during the pandemic were centuries ago. After hitting a COVID-19-related all-time high in late 2021, the stock fell and has been on a strong downtrend ever since, falling more than 50% from its 2021 high.

The steady decline occurred as the world emerged from the pandemic and several biotech companies grappled with COVID-related decreased demand for their products. However, in its latest earnings report, the company reported a setback in earnings as its declining COVID-related business lost less than expected.

So the question now arises: Could this steep and steady sell-off represent an opportunity to pick up PFE stock on the cheap as its stock approaches 10-year support near $26?

Pfizer beats estimates and faces headwinds

Pfizer delivered an unexpected fourth-quarter profit despite COVID-19-related revenue declines, demonstrating resilience amid changing market dynamics. The return of fewer Paxlovid doses than initially estimated was a notable factor contributing to this surprising result, indicating a potential increase in Paxlovid use.

Although Pfizer’s COVID-19 vaccine revenue fell 53% from a year earlier, it still generated sales of $5.36 billion, beating analysts’ expectations of $4.99 billion.

Pfizer has seen encouraging growth in its product portfolio. Revenue from the RSV vaccine, Abrysvo, reached $515 million in the quarter, while drugs like Vyndaqel and Eliquis performed well, with sales figures of $961 million and $1.61 billion, respectively. However, pneumococcal pneumonia vaccine sales fell short of expectations at $1.60 billion, indicating challenges in that segment.

Despite these mixed results, Pfizer’s overall revenue for the fourth quarter came in at $14.25 billion, down 41% from last year. Adjusted earnings per share for the quarter were 10 cents, beating analysts’ expectations of a loss of 22 cents per share. However, the decline in COVID-19 product sales has been significant, with Pfizer and Paxlovid’s COVID-19 vaccine revenues falling 78% from their 2022 peak to $12.5 billion in 2023.

Amid these challenges, Pfizer’s acquisition of Seagen for $43 billion in the fourth quarter aims to revitalize investor confidence. The merger is expected to double Pfizer’s oncology research capabilities and bolster its revenue growth. Nonetheless, with Pfizer shares already down more than 4% year to date and skepticism lingering about its ability to weather market headwinds, the company faces a critical juncture in its efforts to sustain growth and l ‘innovation.

High price target and attractive dividend

Although the stock has a “hold” rating, a rating it has held for over a year, its current price target calls for an impressive upside. Based on fifteen analyst ratings, PFE has a consensus price target of $36.93, predicting an upside of 34%. Most recently, analysts at Cantor Fitzgerald reiterated their PFE rating and a $45 price target, which sees upside of more than 64% for the stock.

The stock offers a significant dividend yield of 6.11% and an attractive price target. Pfizer has a three-year annualized dividend growth of 12.89% and a fourteen-year track record of increasing dividends. The next dividend payment will take place on March 1st.

Bullish institutional and insider activity

Favorable or net positive institutional and insider buying could signal confidence in the company’s prospects and indicate undervaluation, which investors could interpret as bullish.

Over the trailing twelve months, total institutional inflows were $98.12 billion compared to just $11.03 billion in outflows. In the same period, two insiders bought shares worth a total of $5.16m. No domestic sales occurred during the period.

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