Pfizer stock has been severely damaged as investors sought alpha in AI plays, and the company's revenue hangover from the COVID vaccine is adversely hurting growth metrics. Additionally, investors have been gravitating towards businesses that have a substantial exposure to weight-loss medications, such Novo Nordisk and Eli Lilly, which have outperformed their sector peers. Given the generally bearish expert projections, the market is most likely set up for a weak Q2 announcement from Pfizer.
With the exception of AbbVie (ABBV), the dividend yield is currently 4.3%, which is higher than that of any other pharmaceutical company. Additionally, AbbVie's share price is under pressure due to the loss of patent protection for Humira, a >$20 billion selling medicine. Would you think that a 4.3% annual return on an investment with minimal downside risk—Pfizer's stock price rarely changes—would be a good return? It may not be the best company to have in a balanced portfolio, but interest rates are rising, so that may not be the case.
Eliquis, which generated $6.5 billion in revenue for Pfizer in 2022, will lose its patent protection sometime around 2026. The Vyndaqel family of drugs, which treat hereditary forms of transthyretin amyloid cardiomyopathy (“ATTR-CM”) and generated $2.5 billion in revenue last year, and $1.8 billion from the sale of Xeljanz, are also expected to lose their patent exclusivity sometime around 2025.
By 2027, generic versions of the oncology medications Xtandi, Ibrance, and Inlyta, which together generated close to $7.5 billion in revenue in 2022, may pose a danger. In fairness to Pfizer, its M&A spending should help its ex-COVID product portfolio generate revenue growth over the coming years, despite the patents of several important drugs expiring. For context, AbbVie does not expect a single asset to go off patent between now and the end of the decade.
Aside from the outrageous COVID profits, Pfizer is essentially the workhorse of the pharmaceutical industry, diligently advancing its mediocre (from a financial standpoint) but valuable (from a medical standpoint) pipeline and products while companies like Lilly advertise a self-injecting drug that causes you to lose weight and lose appetite. That may seem a bit cavalier towards Lilly, and it is unlikely that Pfizer intended for its stock price to remain so stable, but at the end of the day, 5.7 billion shares with virtually no room for growth and a dividend paying >4% feel equally right.
https://www.barrons.com/news/pfizer-trims-2023-revenue-outlook-as-profits-tumble-5017fcad
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