Do not panic as an value investor
As Pfizer releases its earnings today, I saw panic and frustration all over the forums. Let's revisit the report and numbers, which I'm certain, as a value investor, will help you see the direction Pfizer is heading. The earnings showed a triple beat on top-line revenue, bottom-line adjusted and GAAP net income, along with a raised forward guidance.
I know some of you might ask,"But why would Pfizer go down after such fantastic results?"Let me explain:
1. Recent Revenue Decline: Pfizer experienced revenue declines as COVID-19 became less of a concern. Wall Street is worried about whether their growth trajectory will continue, as organic sales for non-COVID drugs have shown signs of stagnation.
2. Seagen Acquisition Concerns: Wall Street is concerned that Pfizer may have overpaid for its acquisition of Seagen, potentially leading to value destruction.
3. Innovation Streak and Drug Pipeline: Investors are uncertain whether Pfizer will continue its streak of innovation, as the pipeline of new drug development appears to have slowed down.
However, these are not insignificant concerns, and the data and facts speak for themselves:
Answer to Concern 1: In the past few quarters, Pfizer's non-COVID drugs have shown solid organic growth of over 10% consistently, while the demand for COVID drugs like Paxlovid and Comirnaty well exceeded expectations.
Answer to Concern 2: The Seagen acquisition positions Pfizer well for expansion in oncology (cancer) drugs. After consulting with biotech analysts from Jefferies, who initially viewed this acquisition as overpriced, their opinion shifted due to the immense potential in oncology—likely Pfizer's newest and potentially largest growth trajectory.
Answer to Concern 3: Pfizer continues to test and develop new drugs as part of its innovation efforts. Their acquisition strategy has also solidified their position as a market leader.
While these concerns have been addressed, the main issue now is a loss of investor trust. Pfizer's track record over the past few years has not been strong, leading some investors to lose confidence. However, if we extend the timeline to 30 or even 50 years, Pfizer has consistently generated great returns for investors.
Moreover, from a value perspective, Pfizer's multiples are at one of the lowest points in its history. With its current performance and upward revised guidance, a P/E ratio of 10, multiples well below the industry average, and almost no debt, what downside remains?
In terms of growth, Pfizer's new drug pipeline, oncology advancements, and current growth are indicators of a better future. By P/E, it's undervalued; by multiples and comparables, it's undervalued; and by DCF or any other model, it's undervalued. So, I've more than doubled my position as it dropped.
The panic led some investors to sell, but don't let emotion get in your way.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Graduate with Economic and Math degree. Been tracking and learning in the market for over 7 years. Student of Buffett.
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MonkeyGee : most traders or investors are somewhat more intelligent than the average individual. Therefore, it is our weakness that we are always looking for reasons for something. To justify our decisions, being too logical. Guess what, the AI knows that and will use it against the traders. What supposed to go up will go down. The one thing the AI can't do is force you to sell, but they can trick you to sell. That's why I walk away when I know they are playing games.
Tonyco MonkeyGee : If you spend some time using AI, then you will see how silly that sounds. Don't be afraid of AI, it can sometimes not even do basic things if you word it the "wrong" way.
MonkeyGee Tonyco : These are not retail AI. these are the BIgboy AI (Goldman, JP, Morgan). I can see them moving the price before you submit your order.