Pfizer (PFE) ended last week on a sour note, announcing after the market closed on Friday that it will cut $9 billion from its sales outlook. And yet, the stock is up more than 5% so far in Monday morning’s trading session.
The full-year EPS has been adjusted to $1.45 to $1.65 on revenue between $58 billion to $61 billion. This is a step backward, which the company attributes to dwindling performance on two drugs:
- COVID treatment Paxlovid will see a revenue reduction of around $7 billion
- Comirnaty COVID vaccine will see a revenue reduction of around $2 billion
On top of these two drugs, Pfizer is also preparing to take a $5.5 billion charge in writing off COVID-19 product inventory. The new outlook is well below the FactSet consensus of $3.29 a share on revenue of $65.96 billion.
This shouldn’t come as a surprise to anyone as the COVID pandemic is now well in the rearview mirror. The writing has been on the wall for a few quarters now. Just a few months ago in August Pfizer took a hit after the company admitted to a dramatic drop in demand for COVID-related products.
But, the company still remained confident it would post full-year earnings of $3.25 to $3.45 a share on revenue of $67 billion to $70 billion. It appears Pfizer is out of the denial stage and has accepted the new reality of a post-pandemic company.
That being said, the cost realignment program Pfizer has implemented is reportedly going to save at least $3.5 billion over the next few years – $1 billion of which will be saved this year alone. This is good news for PFE investors, and bad news for employees – as jobs are going to be cut along the way.
All this being said, PFE is still down dramatically over the last year – losing more than 21% of its value. Is this trajectory going to continue, or is there a reason for investors to continue holding onto hope that the company can thrive even after the pandemic?
We’ve taken a look through the VectorVest stock analyzer below and have 3 things you need to see before doing anything else as a current or prospective PFE investor…
PFE Has Fair Upside Potential, Safety, and Timing - It’s Worth Holding Onto This Stock Still
VectorVest simplifies your trading strategy by giving you all the insights you need to make clear, calculated decisions in 3 ratings. These are relative value (RV), relative safety (RS), and relative timing (RT).
Each sits on its own scale of 0.00-2.00 with 1.00 being the average. Better yet, the system issues a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. As for PFE, here’s what we found:
- Fair Upside Potential: The RV rating draws a comparison between a stock’s long-term price appreciation potential and AAA corporate bond rates & risk. While PFE has a fair RV rating of 0.87, it is a bit below the average. VectorVest also shows that the stock is overvalued with a current value of just $29.84.
- Fair Safety: The RS rating is an indicator of risk. It’s drawn from the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity. As for PFE, the RS rating of 0.99 is just below the average and considered fair.
- Fair Timing: The RT rating looks at a stock’s price trend. It takes into account the direction, dynamics, and magnitude of price movement day over day, week over week, quarter over quarter, and year over year. PFE has fair timing with an RT rating of 0.90 despite being down 6% over the past few months alone.
The overall VST rating of 0.92 is deemed fair for PFE, albeit below the average. VectorVest rates this stock a hold right now - but we encourage you to learn more through a free stock analysis today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. PFE announced Friday that it would cut $9 billion from its sales outlook, but the market reacted by sending shares higher. That being said, the stock has fair upside potential, safety, and timing.
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