What's Happening With Pfizer Stock?

Core Viewpoint - Pfizer's stock has significantly underperformed compared to its peers and the broader market, primarily due to declining revenues post-COVID vaccine demand and overestimation of long-term product demand [1][3]. Group 1: Stock Performance - Pfizer stock currently trades at $29 per share, which is 45% below its peak of $54 in December 2021 [1]. - The stock was at $47 in early June 2022, before the Federal Reserve began increasing interest rates, and is still 40% below that level [1]. - In contrast, Merck's stock has increased by 54% during the same period, while the S&P 500 has gained 50% [1]. Group 2: Recent Developments - Activist investor Starboard Value has acquired a $1 billion stake in Pfizer, likely pushing for strategic changes [2]. - A UK court upheld Pfizer's bid to invalidate two GSK patents related to a respiratory syncytial virus vaccine, which is a positive development for the company [2]. Group 3: Financial Outlook - Pfizer's estimated valuation is around $34 per share, indicating a 15% upside from current levels, based on a projected earnings per share of $2.62 for 2024 [3]. - The company’s revenue rose from $41.7 billion in 2020 to $100.3 billion in 2022, but fell by 42% year-over-year to $58.5 billion in 2023 [8]. - Earnings per share dropped from $1.71 in 2020 to $0.37 in 2023 on a reported basis [8]. Group 4: Debt and Cash Flow - Pfizer's total debt increased from $38 billion in 2020 to $71 billion currently, largely due to the Seagen acquisition [9]. - The company has a cash cushion of approximately $12.7 billion and generated $8 billion in cash flows from operations over the last twelve months, indicating it can meet near-term obligations [9]. Group 5: Future Growth Potential - Despite recent declines, Pfizer is expected to deliver low to mid-single-digit average annual growth in the coming years as market sentiments improve [10]. - The company's high debt level remains a significant challenge to achieving these growth targets [10].