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Pfizer has been struggling for several years.
The company's pipeline could help it turn things around.
It also has a solid dividend program and is attractively valued.
Trading at a bit under $25 apiece, Pfizer's (NYSE: PFE) shares appear tentatively cheap. However, the pharmaceutical giant reached these levels because it has faced significant headwinds, resulting in a poor stock market performance over the past three years.
Yet, what is the outlook for the struggling giant from here? Is Pfizer worth investing in at current levels?
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Image source: Getty Images.
Pfizer's revenue and earnings have been inconsistent over the past few years. To make matters worse, the drugmaker will encounter important patent cliffs within a few years, including that of Eliquis, an anticoagulant and one of its best-selling drugs. Even so, the company has been gradually earning new approvals, some of which should have a meaningful impact on its financial results as label expansions are secured.
Further, Pfizer has doubled down on acquisitions, which has helped it improve its pipeline. The company now has a comprehensive list of candidates across multiple therapeutic areas, with a particular focus on cancer. It also boasts a promising candidate for weight loss. Pfizer should launch several new products that will bolster its lineup through the end of the decade.
Purchasing shares of top companies when they are down is a great way to earn excellent returns over the long run. Pfizer is a top pick to consider, given that it has been making the right moves to overcome slow (or non-existent) revenue growth and patent cliffs. And there are even more reasons to consider the stock. Here are three.
First, Pfizer penned a deal with the Trump administration that will allow it to avoid tariffs for three years. Second, the company is a solid dividend payer. It has increased its payouts by 51.3% over the past decade, and boasts a juicy forward yield of 6.9%.
Lastly, Pfizer is trading at 8.5 times forward earnings, much lower than the 18.4 healthcare sector average. All these make for compelling reasons to buy the stock.
Before you buy stock in Pfizer, consider this:
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
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