Opinions Gordon Reid
Pfizer IncPFECOMMENTMay 03, 2016
Gordon ReidStock price when the opinion was issued
As of Jun 04, 2026. Market Open.
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Attractive dividend. More of a marketing engine (and it's been really successful) than a drug development company. Once that Iran conflict trade comes off, defensives will be likely recipients. If you own, he probably wouldn't sell here; keep collecting the dividend, and perhaps sell later on strength.
Not everything in your portfolio will be going gangbusters at all times. Leadership rotates and takes turns.
Wasted $$ after the pandemic. Now refocused. Blockbuster drugs are tapped out, needs a new one. They will find one, and you could make a lot of money.
Meanwhile, you collect the yield of 7% (which is probably good for the next 3 years). If they don't find a monster drug by then, dividend will probably be cut. He's taking the risk.
Bruce MurrayIt over-earned during Covid which was not sustainable. It is trying to make up for lost revenue now. It is a high quality company but needs a near term catalyst. Its pipeline investments will take a while. Dividend yield is attractive. Look for more attractive health care companies with both dividend and growth opportunities.
Trading at 8-9x PE. Problem (as for many pharma companies) is that the drugs that make the most amount of $$ are social drugs (Prozac, weight loss) rather than drugs that solve the actual problem (each cancer drug is very niche). Historically, traded at high multiples because people thought they were growth companies; but pharma is not as growthy as people thought. Yield is 6%.
He owns NVO and LLY, and those are his preferences. Drugs with these two will generate lots of money over the next few years.
PFE is very cheap at 8X earnings with a 6.78% dividend. But it has been cheap for a while. It still has uncertainty over Covid revenue, and its full year guidance raise (2.5%) was not so impressive. EPS is still expected to fall marginally in 2026 ($3.11 to $3.00). With lower interest rates ahead (probably) and a possible economic slowdown (always possible) and possible sector rotation, there will come a time when the stock performs much better. We would of course like to see higher growth. For patient investors, we think it is buyable, but we would stress the need for patience here. The government push towards lower drug prices may keep sentiment negative for a longer period of time.
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Pays a 6.9% dividend. The Covid vaccine days are long gone, so shares have been stuck around $25 for months. So, you still get a decent return from the dividend. Pfizer has been buying companies in recent companies, like Seagen, so they can build a powerful drug pipeline to offsets patent expirations.
Just reported and had quite good earnings. They are reeling, of course, from the government decision to not allow the Allergan deal to go through. There is a lot of debate because the 2 companies were within the law, but the tax inversion issue is a big one, and the way it was done is leaving a bad taste in people’s mouths. Pfizer is just starting to move out of the issue of Lipitor coming off patent. It was a blockbuster drug before, but when it goes generic you see sales drop dramatically. Their pipeline has been building. This company has had basically flat revenues and earnings for 4 or 5 years, and is trading at about 20X earnings. A bit of a “show me” stock, and that goes for most pharmaceuticals. You are better off going into biotechs. Prices have come down quite dramatically, and are trading at cheaper multiples than Pharma drug companies. Have a look at Biogen (BIIB-Q) or Celgene (CELG-Q).