Stockchase Opinions

The Panic-Proof Portfolio (Stockchase Research) Pfizer Inc PFE-N TOP PICK Apr 19, 2022

Stockchase Research Editor: Michael O'Reilly PFE has a long pipeline of new drugs focusing on oncology, rare diseases and vaccines, generating over $50 billion in annual sales. It trades at 13x earnings compared to peers at 20x. Latest reported earnings beat expectations by 27% and supports a ROE over 34%. Its dividend is backed by a payout ratio under 40% of cashflow. It is managing its cash reserves conservatively, maintaining a good war chest, while still retiring debt. We would recommend a stop loss at $42.00, looking to achieve $60.50 -- upside potential of 19%. Yield 3.0% (Analysts’ price target is $60.47)
$49.575

Stock price when the opinion was issued

biotechnology pharmaceutical
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DON'T BUY

It's cheap, but for a reason. Sees no growth, despite a big acquisition. Consider Merck or Amgen for perhaps more growth.

HOLD

You'd have thought they'd be hit more by tariffs, as Trump hammers on that many drug components are made overseas. So the market must be thinking tariffs will benefit pharma, to explain why this name is up on such a tremendously down day. Keeping people guessing and on a knife's edge isn't a bug of the current US administration, it's a feature.

His healthcare investments focus on health management like UNH and medical devices.

DON'T BUY

Thinks dividend is safe, but may be challenged. Spent billions on acquisitions, but hasn't gained much. Not growing. Any boost to bottom line comes from cost cuts. Downhill since Covid, pipeline not strong. Better opportunities in the pharma space, such as MRK. 

BUY

Failure in a couple of drugs. Huge research program; they will find new drugs. Outstanding stock to accumulate because, at some point, they're going to announce a new drug and the stock will pop. Yield is close to 7-8%.

BUY

Hangover from its Covid highs. Working on an obesity pill, but pulled back on it. Opportunities in the pipeline. Owned in his income growth portfolio for the yield. Despite the chart, likes it here. Fairly cheap, hopefully hitting a bottom (knock wood).

BUY

It can bottom here. He believes in their Seagen acquisition.

WATCH

Once upon a time, he really liked it. Beaten up for inability to bring forward a weight-loss drug; that may or may not be a realistic critique of this stock long term. Analyst community is really...just...waiting. He sold last year, not ready to come back in. Solid company, an improved oncology pipeline might be a reason to get back in.

BUY

Pays a 7% dividend. Something good must be coming out of their Seagen acquisition. The pipeline looks promising.

DON'T BUY

He owned it but sold. Free cash flow is not abundant and it has a lot of debt. It will take time to turn around but pays a good dividend.

Unspecified

She likes the space but people are not investing in it. It has a low valuation and is tempting but she prefers elsewhere. It is a global leader in a crowded field. She sees 5% growth so there is some upside.