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Why Pfizer Is My Largest Healthcare Position
PFEPfizer(PFE) The Motley Fool·2025-03-27 10:45

Core Viewpoint - The healthcare sector has faced negative sentiment since late 2022, but Pfizer remains a strong investment opportunity despite its recent poor performance [1][2]. Company Overview - Pfizer's shares have decreased by 47% from their three-year high and currently trade at a low forward price-to-earnings ratio of 8.7, making it an attractive investment [2][21]. - The company has a solid foundation supported by strong cash flow from a diverse range of drugs, despite political uncertainties in healthcare policy [3][4]. Pipeline and Growth - Pfizer is improving its pipeline productivity with several potential blockbuster drugs in cancer and immunology, including a significant contribution of 3.4billioninrevenuefromthe2023acquisitionofSeagen[5].−ExcludingCOVID−19productsales,Pfizer′srevenuegrewby123.4 billion in revenue from the 2023 acquisition of Seagen [5]. - Excluding COVID-19 product sales, Pfizer's revenue grew by 12% operationally in full-year 2024, indicating the strength of its core business [7][22]. Financial Health - Pfizer has successfully achieved 4 billion in net cost savings and aims for 4.5billionbytheendof2025,whichisexpectedtoimprovemarginsovertime[9][10].−Thecompanyoffersasubstantial6.74.5 billion by the end of 2025, which is expected to improve margins over time [9][10]. - The company offers a substantial 6.7% dividend yield, significantly higher than the S&P 500's yield of around 1.29%, and has a strong track record of 345 consecutive quarterly dividends and 16 years of dividend increases [12][14]. Valuation and Market Position - Pfizer's fair value estimate is 42 per share, suggesting significant upside potential from its current trading price of approximately 25.5[15].−Thecompanyreportedfull−yearrevenueof25.5 [15]. - The company reported full-year revenue of 63.6 billion for 2024, with a healthy 7% year-over-year operational growth, reaffirming its financial guidance for 2025 [16]. Competitive Advantages - Pfizer's large size provides competitive advantages in drug development, supported by a broad portfolio of patent-protected drugs and a strong sales force, particularly in emerging markets [4][6]. - The company is well-positioned for steady growth with limited patent losses and a diverse portfolio that mitigates risks associated with patent expirations [8][22].