Understanding Pfizer’s Projections
In its guidance announcement on Wednesday last week, Pfizer detailed its expectations for the year 2024. With the demand for COVID-19-related vaccines and treatments gradually waning, Pfizer anticipated that sales of Comirnaty (the Pfizer coronavirus vaccine) and Paxlovid (the Pfizer treatment for coronavirus) would amount to only approximately $8 billion. Additionally, Pfizer’s recent acquisition of Seagen is predicted to contribute approximately $3.1 billion in oncology sales. Despite these factors, the total sales for the year are projected to be in the range of $58.5 billion to $61.5 billion, indicating modest year-over-year growth of around 4%.
The adjusted earnings on a non-GAAP basis are expected to fall between $2.05 and $2.25 per share. This estimate takes into account the $4 billion reduction in annual costs. However, it should be noted that the acquisition of Seagen will lower the year’s profit by approximately $0.40 per share, as explained by Pfizer.
Citigroup’s Perspective on Pfizer
As reported on The Fly today, Citigroup has placed Pfizer’s stock under a “90-day catalyst watch,” anticipating that within the next three months, the pharmaceutical giant will disclose information significant enough to revise its guidance—and thereby augment its stock price.
Citigroup believes that Pfizer’s earnings will exceed the upper end of its published guidance range by at least 11%, equating to a minimum of $2.50 per share. Intriguingly, this revelation alone fails to convince the bank that Pfizer stock should be rated as a “buy.”
Consider this: If Pfizer earns $2.50 per share, and its current share price stands below $28, the resulting price-to-earnings (P/E) ratio is merely 11.2. Consequently, it seems justifiable to value this leading pharmaceutical company at this level, especially with its promised growth of 4% to 5% next year.
Permit me to express my optimism. Following a nearly 50% decline in Pfizer’s stock price over the past year, it appears that now may be an opportune moment to consider acquiring Pfizer stock.