Why Pfizer stock is rebounding

Large pharmaceutical company stock prices rise for 3 consecutive days Pfizer (PFE 2.33%) Heading higher. I’m a bit curious. Just last week, Pfizer issued optimistic guidance for the year ahead. But today analysts Citigroup Pfizer puts out a note that suggests it’s preparing to undercut the market and outperform earnings in 2024.

Pfizer shares rose 3.1% as of 10:50 a.m. ET.

What Pfizer Said

Last Wednesday, Pfizer gave investors a look at what to expect in 2024. As demand for COVID-19-related vaccines and treatments continues to decline, Pfizer forecast sales of Comirnati (Pfizer coronavirus vaccine) and Paxlovid (Pfizer treatment). The total cost of the coronavirus next year will only be about $8 billion. The company’s acquisition of Seagen will add approximately $3.1 billion worth of oncology revenue. But even so, total sales this year are only between $58.5 billion and $61.5 billion, so at the midpoint, $60 billion would equate to about 4% year-over-year growth.

Non-GAAP (adjusted) earnings ranged from $2.05 to $2.25 per share. This is even after reducing annual costs by $4 billion. (Pfizer explained that the cost of acquiring Seegene will deduct about $0.40 per share from this year’s profits.)

What Citigroup Says About Pfizer

As reported on The Fly today, Citi is putting Pfizer stock on a “90-day catalyst clock” and looking forward to it within the next three months (i.e. until new guidance comes out in Pfizer’s first quarter earnings report). , the pharmaceutical giant will report enough news to boost its guidance and even its stock price.

Citi thinks Pfizer will make money. At least 11% more than top The company’s published guidance range is at least $2.50 per share. But interestingly, that alone isn’t enough to convince bankers that they’ll buy Pfizer stock. Analysts only rate Pfizer stock as Neutral.

Is that the right phone though? What I mean is, if Pfizer earns $2.50 per share and the current stock price is less than $28, that means the stock has a P/E ratio of just 11.2. Pfizer’s outstanding dividend yield of 6.2% is enough on its own to cover half of its valuation. In my view, if Pfizer grows just 4% or 5% per year (which it promises to do next year), that would more than justify the valuation for this top pharmaceutical company.

Call me an optimist if you want. But after seeing the stock price fall by almost half over the past year, I think you might want to buy Pfizer stock right now.