Pfizer reported its Q1 results, exceeding street estimates with revenue of $14.9 billion and an adjusted profit of $0.82 per share. Despite a decline in sales due to lower demand for Covid-19 products, the company’s performance was noteworthy. PFE stock has seen a decline of 15% from early January 2021, now at around $28. While it underperformed the S&P 500 in 2023, PFE stock has had varied returns over the years, indicating inconsistency in performance.
In a challenging macroeconomic environment with high oil prices and elevated interest rates, Pfizer faces uncertainty. From a valuation perspective, PFE stock appears appropriately priced around $28 per share. Pfizer’s Q1 revenue of $14.9 billion was down 19% y-o-y, with lower sales of Covid-19 products impacting overall performance. Despite this, sales growth excluding Covid-19 products was at 11%, driven by strong performance in key medications. Adjusted net margin decreased due to higher R&D expenses, resulting in earnings of $0.82 per share in Q1.
Looking ahead, Pfizer expects its 2024 sales to be in the range of $58.5 billion and $61.5 billion, with a contribution from the Seagen acquisition. Earnings for 2024 are projected to be between $2.15 and $2.35 on an adjusted basis. While the Seagen acquisition is seen as positive, PFE stock is considered appropriately priced around $28 currently. Trading at 12x forward earnings, the stock’s valuation multiple has declined compared to the past five years, reflecting the impact of lower demand for Covid-19 products.
Despite Pfizer’s stock being fully valued, it’s important to assess how the company’s peers are performing. Peer comparisons can provide valuable insights into Pfizer’s standing within the industry. Overall, with its recent Q1 results exceeding expectations and a positive outlook for 2024, Pfizer’s position in the market remains stable. While facing challenges from lower demand for Covid-19 products, the company’s performance and valuation indicate a stable outlook for investors.
