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Is Pfizer a buy?



With meme stock mania back in focus I'd figure now would be a good time to pitch something boring. So boring, that it has been around 175 years. Pfizer.


The stock is down over 20% in the past year and essentially 50% in the past two years. Trading at a decade low, lets go into why now might be a good time to take a look and why it is down so much.


Pfizer cannot wait to put 2023 in it's rearview mirror. The company bet big on it's COVID-19 vaccine and demand completely fell off the table. It's not terribly surprising that demand for the vaccine dropped, but what is more surprising is how heavily Pfizer bet on the vaccine in the first place. Their Comirnaty vaccine sales dropped 70% while their Paxlovid treatment dropped 93%. That's a good start as to why the stock did so poorly.


In addition to the COVID missteps above, they have some important drugs coming off patent which can lead to competing products in the market. So far, not good. So why should we consider buying it here? Here is my case: Seagen.


What is Seagen and how are they a part of Pfizer? Last year Pfizer shelled out $43 billion to acquire the cancer specialist. Doing so will roughly double the size of it's oncology portfolio. The leadership team at Pfizer believes Seagen has the potential to deliver at least eight blockbuster products by 2030. In addition the acquisition is supposed to add $3.1 billion in sales for Pfizer in 2024. Okay, nice start. What else?


Pfizer also made a hire recently that I found interesting. They hired an analyst from Citigroup who had been covering their company for over a decade. Not only has he been covering the stock for a decade but he hasn't had a "buy" rating on the stock during that time frame. Andrew Baum, the recent analyst hire, has been head of global healthcare at Citi. He will now be moved into the role of "chief strategy and innovation officer" at Pfizer.


This is incredibly interesting. They are taking their biggest critic and essentially allowing him to steer the ship. Hopefully he can give some sound advice to the CEO on what they need to do to improve the company and drive returns for shareholders.


Based on Baum's last note to analysts, investors are undervaluing Pfizer's new Seagen pipeline. He wrote:


While no investor could ever describe us historically as a Pfizer bull (our last positive rating was 11 years ago), last week’s oncology meeting added to our confidence in our previously published view that the market undervalues PFE’s oncology pipeline.

Another thing to note is apparently the CEO, Albert Bourla, is putting his entire pension into PFE stock. I don't have the receipts for this, just a quote from him back in January at the World Economic Forum stating he has done so.


So is now the time to get involved in this 175 year old company? I have. I bought a position in it last week around $28.


I think much of the bad news is priced in, the CEO is willing to put his money where his mouth is and make vital changes, they have a fresh perspective with Baum, and there is a 6% dividend to pay you while you wait for the turnaround. Oh, and it's trading just over 10x forward earnings compared to the S&P 500's 21x.


The market moves fast these days, especially with the meme stocks back in vogue. But I think Pfizer, like Hershey, is a great name to add to my portfolio to achieve some income while also focusing on the long-term returns. I think the reward outweighs the risks at these prices, especially in a frothy market.

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