Billionaires Are Buying Beaten-Down Pfizer Stock Hand Over Fist. Should You Follow Their Lead?

Billionaires Are Buying Beaten-Down Pfizer Stock Hand Over Fist. Should You Follow Their Lead?

The last two years have not been easy to be a Pfizer (NYSE:PFE) shareholder. Windfall profits from COVID-19 products produced early in the pandemic have evaporated much faster than expected.

Disappointed investors have driven Pfizer’s stock price down by more than half from its peak in late 2021. Perhaps sensing a bargain, billionaire fund managers have competed this year to scoop up the giant’s shares of the pharmaceutical industry.

In the first quarter, Steve Cohen and Point72 Asset Management initiated a new Pfizer position with nearly 1 million shares. Jeff Yass at Susquehanna acquired about 1.5 million shares for a new position.

Some billionaires bet even more on Pfizer than Yass and Cohen. John Overdeck and Jason Siegel of Two Sigma acquired a whopping 18.9 million pharmaceutical shares in the first quarter.

Why billionaires are buying Pfizer

Pfizer’s COVID-19 products generated huge cash flows that the company reinvested in potential new blockbusters that could propel total sales to new heights. Its biggest investment was the $43 billion acquisition of Seagen, a cancer drug developer that had four drugs approved when Pfizer completed the deal late last year.

Since acquiring Seagen, one of these new drugs, Padcev has gained an important position label expansion of the Food and Drug Administration (FDA). It is now approved to treat newly diagnosed patients with advanced bladder cancer.

New cancer patients tend to stay in treatment much longer than people who have already relapsed. Analysts who track the industry expect Padcev’s first-line indication to generate $2.5 billion in additional annual sales.

Of course, Padcev isn’t the only new cancer drug that could generate significant sales growth for Pfizer. Lorbrena is a lung cancer treatment approved for newly diagnosed patients with a specific genetic mutation. First-quarter sales rose 46% year-over-year. However, with an annualized amount of $656 million, this drug has plenty of room to grow.

Long-term investors who buy Pfizer now could be greatly rewarded for their patience. In 2023, the company reported a record nine FDA approvals of new drugs it was developing. They can’t all be zingers, but there are bound to be at least a few. blockbuster movie in the peloton.

A buy for risk-averse investors

Pfizer offers a dividend yield of 5.9% at recent prices. It has been able to increase its dividend every year since 2009, and regular increases in future years are unlikely to be a problem. Management expects adjusted earnings to be between $2.15 and $2.35 per share this year. That’s enough to support a dividend currently set at $1.68 annualized per share and increase it further.

Investors can also expect significant earnings growth in the coming year. The Seagen acquisition added many overlapping positions earlier this year. By rightsizing its operations, Pfizer believes it can reduce annual expenses by at least $4 billion before the end of the year.

It might not seem like it at first glance, but Pfizer is growing sales at an impressive rate for an established pharmaceutical giant. Ignoring declining COVID-19 product sales and the negative effects of a stronger dollar, first-quarter sales were up 11% year-over-year.

There is no guarantee that Pfizer can continue to increase its total sales by double digits. Fortunately for interested investors, the stock doesn’t need to grow that quickly to generate market-beating gains from recent prices. Pfizer shares trade at a low multiple of around 12.2 times earnings forecasts. Adding a few stocks to a diversified portfolio now seems like a great idea to most investors.

Should you invest $1,000 in Pfizer right now?

Before buying Pfizer stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Pfizer wasn’t one of them. The 10 selected stocks could produce monster returns in the years to come.

Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $566,624!*

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.

See the 10 values ​​»

*Stock Advisor returns May 13, 2024

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool holds positions at and recommends Pfizer. The Motley Fool has a disclosure policy.

Billionaires are buying hand-beaten Pfizer stock. Should you follow their example? was originally published by The Motley Fool

Source Reference

Latest stories