Pfizer trades with a valuation well off of its 10-year average
Shares of Pfizer (NYSE:PFE) have declined almost 7% since I
last looked at the company in depth. Despite this weakness, I believe that the
company has strong prospects for growth. The stock continues to offer a
dividend yield that is superior to its long-term average while trading with a
very low price-earnings multiple.
This article will examine why I think Pfizer remains a
strong buy for investors looking for exposure to the health care sector.
Quarterly highlights
Pfizer reported second quarter earnings results on July 28.
The company's revenue fell 11% year-over-year to $11.8 billion, but managed to
top Wall Street analysts' estimates by almost $250 million. Adjusted earnings
per share decreased by 2 cents, or 2.5%, to 78 cents. Analysts had expected
lower numbers, as EPS was 12 cents higher than estimated. Currency was a 2%
headwind to revenue and lowered adjusted EPS by 3%.
Let's start with the bad. The company's Upjohn segment was
down 31%. Upjohn houses Pfizer's off-patent branded and generic medicines and
is expected to complete its merger with Mylan (MYL) in the fourth quarter of
this year. Much of this decline was due to the loss of exclusivity for Lyrica
in 2019. Removing this, Upjohn revenue were down 6%. Offsetting this decline
was 17% growth in China, which saw strength in Lipitor and Norvasc.
Covid-19 is believed to have reduced revenue by
approximately $500 million, or 4%, due to fewer wellness visits for pediatric
and adult patients in the U.S. and lower demand for products in China.
Partially offsetting this was higher demand in the U.S. for sterile injectable
products and higher volumes of Prevnar 13 in international markets.
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