Will Pfizer Stock Go Up? Pfizer Inc. (NYSE:PFE) CEO Albert Bourla got investors both excited and scared during the company’s most recent quarterly earnings call. The company rang up $3.5 billion in sales off its coronavirus vaccine, BNT162b2, which it developed in partnership with BioNTech SE (NASDAQ:BNTX).
Of course, that could be just the tip of the iceberg for the company’s top line sales which begs the question – will Pfizer stock go up?
That could depend on whether Bourla’s grim prediction turns out true. The 2020s as a decade could very well be defined the same way 2020 as a year was. COVID-19 is just one viral strain that continues to evolve. This could mean coronavirus season becomes as common as flu season, something anti-vaxxers were ironically claiming at the start.
With that, Pfizer could have a sustainable revenue stream in coronavirus vaccines. Humanity’s battle against these potentially deadly viruses could prove to be an epidemic that lasts much longer than initially thought.
Pfizer CEO: Demand for COVID Vaccine Is “Durable”
Although it was later to the party, BNT162b2 proved highly effective in its phase 3 clinical trials with the U.S. Food and Drug Administration (FDA). However, new SARS-CoV-2 variants are proving much more resilient against current vaccines.
That’s why Bourla called demand for the COVID-19 vaccine “durable.” This word sent shivers of both fear and excitement down investors’ spines because it means both profits and more infections down the road.
Like flu season, we could see continual seasonal outbreaks moving forward, and if that prediction is accurate, it could define the Biden Presidency more than Trump’s. Of course, Pfizer has stiff competition – there are multiple companies with Emergency Use Authorization (EUA) from the FDA and regulators in other countries.
That could cap its potential growth, but the company still forecasts growth from the vaccine.
How Much Does Pfizer Make from Vaccine?
Pfizer’s coronavirus vaccine accounted for $3.5 billion in sales in the first quarter of 2021. It’s expecting to generate a total of $26 billion in revenue from BNT162b2 for the year. And it has supply agreements that guarantee sales through 2023.
It could get renewals from there, but investors can count on those sales for at least the new few years. Not only is its current vaccine effective against the SARS-CoV-2, but it’s also proving effective against all current variants.
On top of that, it has more vaccine candidates in its pipeline to account for future mutations. And it’s working on vaccines that could be used on young children with less risk of complications. That means it has a diversified coronavirus arsenal that’s ready to battle any competition.
But if it’s such a great investment, why did Warren Buffett sell Berkshire Hathaway’s (NYSE:BRK.A) stake in PFE?
Why Did Buffett Sell Pfizer?
The Oracle of Omaha is notorious for his long-term investments, for example holding stakes in Coca-Cola (KO) and Wells Fargo (WFC) for over 30 years. So, when the company opened a Pfizer position in the third quarter of 2020, it gave investors confidence it would be a similarly long-held position.
That didn’t pan out – Pfizer was one of 15 stocks that Berkshire closed out before the end of that year.
It turns out Buffett didn’t make the purchase himself. It was made by one of his investing managers who have more involvement in the firm’s purchases these days. Todd Combs and Todd Weschler often have investment decisions delegated to them.
Not only did it sell off Pfizer, but it also bought more shares of AbbVie (ABBV), Merck (MCK), and Bristol Myers Squibb (BMY). These pharmaceutical investments didn’t outperform Pfizer. In fact, the company’s profitability improved over the past six months, and it seems to have been a liquidity move.
There’s no compelling reason to follow Buffett’s lead.
Is Pfizer Stock Undervalued?
Despite its size, Pfizer could be undervalued at a $220 billion market capitalization. It’s trading at about 20x earnings, and the healthcare sector’s average is 33x. That means the company is potentially an undervalued dividend growth stock.
In fact, Bourla said as much during his May media rounds for the quarterly earnings call. He believes investors are missing out on the company’s growth potential.
The company is much more than just a coronavirus vaccine maker – it’s a major pharmaceutical giant and the second largest in the world. Its brands include Advil, Lyrica, Robitussin, and Viagra, and it has a robust drug pipeline and broad development and distribution supply chain.
Not only is the company facing possible growth over the next few years, but it also pays a healthy dividend to its investors.
What Is Pfizer Dividend?
Pfizer pays a consistent quarterly dividend that has been dependable for over a decade. It regularly pays out and even increases the dividend by $0.01 to $0.02 every year.
It just so happens that the company also paid a special dividend of $1.967 in November 2020, which coincides with Berkshire’s Pfizer investment.
It’s paying a $0.39 quarterly dividend in 2021, up $0.01 from the 2020 payouts. That comes out to a $1.56 annual dividend payout, which isn’t the best-paying dividend stock but is still a respectable one that provides dependable liquidity.
Is Pfizer Stock Expected to Go Up?
Pfizer’s CEO has high hopes for his company’s revenues and earnings over the next five years. He has good reason to be – the company has contracts in place that guarantee revenue through at least 2023. That’s just from its vaccine for the coronavirus, which could end up being a constant presence in our lives and society.
And the coronavirus vaccine is only one product it sells. It has a broad drug pipeline to address all aspects of pharmaceuticals moving forward.
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.