Pfizer: Stock Surge, Recovery Signal or Temporary Phenomenon?

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As of September 10, Pfizer's stock price has risen by about 7% since June 2024, which could be just the beginning of its growth momentum. The pharmaceutical giant's non-COVID product line has performed strongly, and Wall Street analysts are predicting that its earnings per share will bottom out in fiscal year 2024, indicating that Pfizer's recovery is just starting.

In the second quarter of 2024, Pfizer's total revenue reached $13.3 billion, a year-over-year increase of 2.13%, marking the first positive growth since the fourth quarter of 2022. Additionally, the company's efforts in cost control have borne fruit, with gross margin rising to 75.16%, a slight year-over-year increase of 0.06%. This improvement is mainly attributed to the strong sales performance of non-COVID products and continuous cost optimization across the production network.

The market's reaction to Pfizer's upward revision of its full-year revenue and earnings per share forecasts has been relatively muted, but I believe that as 2025 approaches, Pfizer is expected to fully reap the benefits of its efforts. In addition to significant updates on the weight loss drug danuglipron and potential cash flow increases, the company plans to realize most of the savings from its manufacturing optimization plan by 2025, with an estimated $1.5 billion in savings by the end of 2027.

On the other hand, while Pfizer faces the risk of patent expirations and loss of product exclusivity from 2025 to 2030, its R&D pipeline and acquisition strategy are expected to offset most of the losses. Moreover, Pfizer's stock currently offers a dividend yield of over 5.5% and continues to invest in research.

Overall, despite the risks of patent expirations, long product development cycles, and political and regulatory challenges, I believe the market may be underestimating the value of the drugs in Pfizer's R&D pipeline. These drugs have enormous market potential and are expected to drive the company's sales and profit growth in the coming years. Therefore, for investors, now appears to be a good buying opportunity.