Could Pfizer Be A Great Pick For Long-Term Investors?
When it comes to looking for the best stocks to buy, pharmaceutical stocks are usually not the first to come to mind. Now, the coronavirus is continuing to hammer the global economy. And certain pharmaceutical companies are also suffering a beating from the lower drug sales. However, just so we are clear, being in a recession doesn’t mean it’s a bad time to invest in the stock market. After all, haven’t we been hearing that it’s normal for the stock market to be disconnected from the economy?
Regardless of how long this recession lasts, investing in pharmaceutical stocks with exposure to Covid-19 programs could be a smart move. Big pharmaceutical stocks are particularly attractive to look at because they typically have the significant financial flexibility to weather economic storms. And if you combine a story of large pharmaceutical stocks and the vaccine program, you have a recipe for a major headline.
Perhaps you’re one of the many investors who are following Pfizer’s (PFE Stock Report) coronavirus vaccine progress closely. And you might be thinking whether now is a good time to buy. You might also be wondering if it’s still too risky to buy right now. That’s considering the uncertainty revolving around the safety and effectiveness of a potential vaccine in late-stage trials.
Earlier this week, Pfizer announced early positive results from a potential coronavirus vaccine it is currently working with the German-based biotech BioNTech in a phase 1/2 trial held in Germany. The trial is testing the safety, immunogenicity, and optimal dose level of these vaccines. What’s more, the FDA granted a fast-track designation to two of these candidates, BNT162b1 and BNT162b2. Pfizer and BioNtech plan on starting a phase 2b/3 clinical trial for the most promising candidates. The trial will enroll up to 30,000 participants, as soon as late July.
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Inclusion In The Operation Warp Speed A Significant Boost To PFE Stock
Pfizer has become one of the top pharmaceutical stocks to watch. That’s after being selected as part of Operation Warp Speed. This in effect allows the company to receive federal funds, logistical support, and assistance with clinical trials to help it develop its coronavirus vaccine candidates.
President Donald Trump called the federal government’s $1.95 billion deal with Pfizer and BioNTech “a historic agreement” that will help the country distribute a coronavirus vaccine in record-breaking time. “Hopefully the approval process will go very quickly, and we think we have a winner there. We also think we have other companies right behind that are doing very well on the vaccines, long ahead of schedule.”
Strategic Restructuring Of Pfizer The Key To Solid Growth
Pfizer is currently in the midst of spinning off its Upjohn generics unit to Mylan (MYL Stock Report). This will allow it to focus on its core biopharmaceutical segment. During the first quarter, Pfizer’s biopharma segment reported a revenue of about $10 billion, an 11% year-over-year increase. By contrast, revenue from the Upjohn unit came in at around $2 billion, representing a 37% year-over-year decline.
All in all, the company’s revenue was $12 billion, 7% lower than the prior-year quarter. A strategic restructuring of the generic unit should allow Pfizer to grow its revenue and earnings at faster rates. Furthermore, Pfizer has a dividend yield of 4.3%. Its consistent history of raising its dividends on an annual basis has made it popular with some income investors. As such, the combination of these factors should allow Pfizer to provide solid returns for long term investors.
The worldwide efforts to find a vaccine heat up. And the next few months will be critical for Pfizer and BioNtech. A successful vaccine would definitely have a tremendous impact on Pfizer’s future growth. However, no matter how encouraging the early data from the company’s ongoing vaccine trials is, things could still go south from here. For this reason, investors should refrain from pinning all their hopes on Pfizer’s potential to win the coronavirus vaccine race. After all, in the unfortunate event where the vaccine program fails to materialize, investors shouldn’t be discouraged. That’s because the company still has a strong pipeline of drugs that are growing at 3 digits percentages.