Revenue growth prospects make the undervalued Pfizer stock a good buy

Revenue growth prospects make the undervalued Pfizer stock a good buy
Updated: 09 Dec, 2020
2 mins read

Pfizer (NYSE: PFE) stock price rebounded in the last month as it earned the leading position in the coronavirus vaccine race, with hopes that its coronavirus vaccine is likely to bring in billions of dollars in the coming quarters.

Several countries, including the United Kingdom and Bahrain, have already issued the emergency use authorization of Pfizer’s coronavirus vaccine that it developed in partnership with the German BioNtech (NYSE: BNTX).

The shares of Pfizer soared almost 13% in the last month alone, helping the stock price to trade in positive territory this year.

PFE Pfizer Inc. daily Stock Chart
Pfizer stock performance. Finviz chart.

Revenue performance to improve in 2021

Pfizer appears like a good stock for a dividend portfolio amid its potential to generate sustainable growth in revenue and earnings. The coronavirus vaccine is likely to generate almost $8 billion in revenue for the company between 2020 and 2021, according to Morgan Stanley.

The company has generated $50 billion in revenue last year, but its revenues fell sharply this year because of the suspension of regular healthcare by physicians due to COVID-19. The hospitals have also been deferring medical procedures over the past two quarters.

Its third-quarter revenue fell 4% from the past year period while earnings per share came in at $0.39 compared to $1.36 in the earlier year period.

Shares remained under pressure throughout the pandemic. Pfizer stock rose only 6% so far this year despite a vaccine-related 13% share price rally last month.

Meanwhile, the market analysts look significantly optimistic about future performance, thanks to its extensive product line. The addition of the coronavirus vaccine would also give a huge boost to revenues as the company promised to deliver 1.3 billion vaccine doses this year.

Pfizer stock – good option for dividend investors

Pfizer stock looks undervalued as its shares grew only 6% this year compared to an almost 16% broader market rally.

The shares also look cheap based on price to earnings ratio of 14 when the industry average is above 20 times. The dividend is among the factors that are adding to investors’ confidence.

The company offers a hefty dividend yield of 3.68% and it has raised dividends in the past ten years.

Featured image via Pfizer.com

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Justinas Baltrusaitis

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.