Is It Too Late To Buy Pfizer Stock?

Pfizer may never have to run marketing campaigns again. After 2020, brand recognition is at an all-time high. Granted, the company has long been a leader in the pharmaceutical industry, but its development of a highly effective COVID-19 vaccine in record time made Pfizer a household name.

Pfizer was first to gain emergency FDA approval to administer vaccines, and patients started lining up in early December 2020. The company has since shipped hundreds of millions of doses worldwide, and the orders are still coming in. 

Pfizer’s success in producing the first hopeful sign that the pandemic can be extinguished has turned investor and analyst attention to stock prices. While Pfizer stock didn’t see dramatic growth as a result of the vaccine yet, many agree that all of the attention – and the stunning sales volume – is sure to have a positive impact on share prices. 

That leads to the big question: does Pfizer stock have room to grow or have returns related to the vaccine peaked? In other words, is it too late to buy Pfizer stock? 

Pfizer Share Price History

Pfizer has been highly successful in developing the drugs for medical conditions that impact large portions of the population. For example, cholesterol-fighting Lipitor, arthritis treatment Celebrex, and the ever-popular Viagra all carry the Pfizer label. 

Unfortunately, Pfizer faces the same challenges all research-based drugmakers do – specifically, the ever-present possibility that a particularly exciting drug candidate will fail in clinical trials.

In 2020, that happened with breast cancer therapy Ibrance, which had been closely watched in hopes of a new, more effective treatment for this disease. The success of the COVID-19 vaccine likely offset significant drops in share prices that might have occurred otherwise. 

Over the past five years, Pfizer stock has had its ups and downs. Like most pharmaceutical stocks, prices rise when drug candidates do well in clinical trials, and then they drift back down until more good news prompts another spike.

Of course, bad news out of clinical trials can lead to sharper drops, as occurred with the disappointing results from Ibrance studies. 

Will Pfizer Vaccine Be A Revenue Spike?

By the end of 2021, Pfizer expects to produce billions of COVID-19 doses. While all revenues are shared with partner BioNTech, both companies are likely to realize an additional $2 billion or more in their top-line results when year-end financials are calculated. 

Better still, this figure is higher than the company initially anticipated because of how the drug is packaged and sold.

Vials were originally said to have five doses each, but it was later determined that each actually holds six doses.

That’s important, because Pfizer’s contracts are structured so that the company is paid by the dose, not by the vial or other measure.

Given this anticipated spike in revenue, most analysts agree that PFE share price is likely to show strong growth in 2021. 

Is Pfizer Stock Overvalued?

Though Pfizer is currently leading the battle against COVID-19, the company is by no means overvalued. In the past five years, its price-to-earnings ratio has gone as low as 11 and as high as 32, averaging 20 for the entire period. Most recently, the price-to-earnings ratio was approximately 16 – well within the industry’s comfort zone. 

It’s also worth noting that Pfizer has demonstrated its commitment to growth through its decision to let go of the Upjohn division.

Upjohn’s limited growth has been dragging Pfizer down, so the change is one of several factors that may drive performance improvements in coming years.

As investors have likely noticed, faster growth often translates into increased valuations – but Pfizer is definitely not in overvalued territory yet. 

Will Pfizer Stock Rise?

In early January, Pfizer CEO Albert Bourla shared thoughts on the company’s future. He expressed confidence that sales will grow by a minimum of six percent through 2025, and he indicated that he expects double-digit earnings growth through 2030. 

If this guidance is accurate, analysts have calculated that shareholders can expect returns between 250 percent and 420 percent in ten years’ time. When Pfizer’s dividend yield of 4.3 percent is added to the mix, returns go even higher.

Certainly, these potential returns are not guaranteed, but Pfizer stock carries less risk than newcomers reporting dramatic quarter-over-quarter growth. Pfizer is an established company with a long history of success, making it likelier than most to deliver on its promise. 

Is It Too Late to Buy Pfizer Stock? The Bottom Line

Pfizer stock has seen strong growth in branding as a result of the company’s work on the COVID-19 vaccine, and most analysts agree that it’s only a matter of time before share prices see the impact of the vaccine boom.

Pfizer is well-positioned for a steady growth trajectory through 2021 and beyond, so it is not too late to buy Pfizer stock. Investors who add shares to their portfolios now will have an opportunity to enjoy the returns that are projected for the upcoming year and beyond. 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.