Monday, 20 March 2023

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Exceptional Value Near 52-Week Lows – TipRanks Financial Blog

Exceptional Value Near 52-Week Lows – TipRanks Financial Blog

It’s been a very nasty slump for shares of Pfizer (NYSE:PFE), which recently touched down with new 52-week lows of around $39 and change per share (now trading at $40.10). The COVID-19 vaccine boom days are over, even if the pandemic isn’t. With that, it will be harder for Pfizer to keep earnings growth going strong. In any case, Pfizer has plenty of tools (like M&A and a robust drug pipeline) it can leverage to help offset looming growth pressures (declining COVID vaccine demand and future patent expiries).

Further, Pfizer stock’s bearish slump has paved the way for some really low expectations, making Pfizer a compelling value play for contrarians willing to brave the negative momentum. Due to a modest valuation and underrated tools to help offset growth pressures, I remain bullish on Pfizer stock.

Pfizer is Getting Ready for a Post-COVID Environment

The post-COVID overhang has also weighed heavily on Pfizer’s vaccine peer Moderna (NASDAQ:MRNA), which is in a bear market as well. As vaccine demand falls, the price-to-earnings multiples of both companies stand to swell. Lower earnings mean a higher multiple, calling for a reduction in share price.

Despite headwinds in the post-COVID environment, shares of both companies, I believe, have overswung to the downside, especially when it comes to Pfizer, which seems very well-equipped to deal with a slow and steady fall in COVID vaccine demand.

Indeed, Moderna had more to gain compared to Pfizer from its mRNA COVID vaccine. Now that the tables have turned, Moderna has more to lose, at least until it launches its next big blockbuster. Still, it’s been a magnificent run for Moderna’s early investors. Despite the latest 67% peak-to-trough drop, shares are still up nearly 600% since late 2018 when shares went public.

As Pfizer continues exploring options to lessen the impact of its declining COVID business, I think investors should be more willing to give the ailing biopharmaceutical firm the benefit of the doubt.

In recent years, Pfizer has been busy putting its COVID windfall to good use on the M&A front. Most recently, Pfizer made its biggest splash in more than a decade with agreements in place to acquire biotech firm Seagen (NASDAQ:SGEN) for $43 billion.

Wall Street Seems Downbeat on Pfizer’s Seagen Acquisition

The Seagen deal will give Pfizer an extensive roster of cancer treatments. More importantly, Pfizer will gain access to an impressive pipeline and…

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