Summary
- Pfizer's share price is currently 33% below fair value.
- It is a financially robust firm that will continue to be profitable.
- Its strong pipeline assures its future profitability.
Pfizer (PFE) has seen its share price fall from the low-$40s to around $30 per share, largely because of the coronavirus outbreak which has impacted global markets. The outbreak, however, should concentrate people's minds on the reality that people cannot do without medication, and that this accounts for the profitability of the pharmaceutical sector. Specifically, prospective investors should realize that they have an excellent opportunity to start a position with this pharmaceutical firm at a bargain price.
The coronavirus outbreak has spared few stocks from experiencing a price drop, as businesses in every sector - from tourism to technology - have been affected. Healthcare stocks like Pfizer have not been spared the general bearishness that has been caused by the hindrance to the global economy that the coronavirus has caused.
However, healthcare companies such as Pfizer may provide the key to overcoming the epidemic. On 03/17/2020, the New York-based drugmaker announced that it has partnered with German biotechnology firm BioNTech SE (BNTX) to co-develop an mRNA-based vaccine for coronavirus, which should be ready for clinical testing by late April. Pfizer's chief scientific officer, Mikael Dolsten, summed up the purpose of the partnership:
We believe that by pairing Pfizer's development, regulatory and commercial capabilities with BioNTech's mRNA vaccine technology and expertise as one of the industry leaders, we are reinforcing our commitment to do everything we can to combat this escalating pandemic, as quickly as possible.
In addition to developing the coronavirus vaccine - clearly the key priority, as it should be - Pfizer reported the following day that its experimental vaccine abrocitinib, used for atopic dermatitis, proved effective in a Phase III study. The firm stated that:
These data, along with other results from other pivotal trials, MONO-1 and MONO-2, will support filings with regulatory bodies, starting with the US Food and Drug Administration (FDA) planned for later this year.
Pfizer also reported a successful outcome for its 20vPnC candidate, which was tested in a Phase III study on patients without immunity to pneumococcal disease, a form of bacterial infection. Pfizer hopes to file an application for this vaccine before the end of the year. These are but a sample of what Pfizer has in the pipeline for 2020, as candidates for treating early breast cancer, hemophilia, and 1L colorectal cancer are also to be submitted for studies. The new drugs should enable Pfizer to continue being profitable in the years ahead, and the company's profitability is clear from its 26.90% operating margin and the healthy revenue and net income figures that it has reported over the past five years.
