Pfizer Inc. (PFE - Free Report) is one of the reputed names in the pharmaceutical sector, not just for its medicines and vaccines but also for its consumer healthcare products. This New York-based company is known for products like Prevnar, Lyrica, Lipitor and Celebrex among others.
Pfizer’s shares have outperformed the large-cap pharma industry in the past six months. The stock has returned 9.9% in that timeframe compared with the industry’s gain of 4.8%.
Pfizer’s outperformance was backed by decent quarterly results, positive news flow and regulatory updates.
Here are five reasons to invest in the stock this year.
Favorable Rank & Earnings Surprise Record: Pfizer has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ithas been consistently beating earnings expectations. Earnings surpassed expectations in each of last four quarters, with an average positive surprise of 4.97%.
The company is expected to record earnings and sales growth of 3.4% and 11.3%, respectively, in 2018. Meanwhile, estimates for 2018 and 2019 are up 6.1% and 4.1%, respectively in the past 30 days.
Strategic Acquisitions & Collaborations: Pfizer has been working on strengthening its product portfolio as well as pipeline through acquisitions and licensing deals. The September 2016 takeover of Medivation strengthened Pfizer’s cancer franchise by adding prostate cancer treatment, Xtandi, to its portfolio. Xtandi is also being evaluated for various other types of cancer and holds immense potential. The June 2016 Anacor acquisition added Eucrisa (crisaborole) topical ointment for treating eczema to Pfizer’s pipeline. Pfizer estimates Eucrisa peak sales potential to be at least $2 billion. The 2015 Hospira acquisition significantly expanded its sterile injectable and biosimilar capabilities.
In addition to acquisitions, Pfizer is looking to drive growth through licensing deals and collaborative agreements. It has strategic deals with big names in the pharma sector like Merck & Co. (MRK - Free Report) (for lung cancer drug Xalkori’s combination and newly approved Steglatro and its fixed-dose combinations for type II diabetes), Bristol-Myers Squibb Company (BMY - Free Report) (for Eliquis) and Glaxo (GSK - Free Report) (for its breast cancer drug Ibrance’s combination).
Deep Pipeline: Pfizer has committed significant resources toward the development of treatments in the fields of oncology, cardiology, metabolic disorders, neuroscience, pain, rare diseases, immunology, inflammation and vaccines, and immuno-oncology. Most of these signify areas in which the company believes it can take leading positions. Pfizer expects approximately 25 to 30 drug approvals over the next five years, including around 15 products that have blockbuster potential, including line-extensions for Xtandi, Ibrance & Xeljanz/XR. Half of these potential blockbusters are expected to receive approval by 2020.
Pfizer has been working on streamlining its R&D efforts and has several late-stage candidates in its pipeline including many immuno-oncology candidates.
A key candidate in its immuno-oncology pipeline is Bavencio/avelumab,which is being evaluated for different types of cancer in collaboration with Merck KGaA. Bavencio is already marketedfor metastatic Merkel cell carcinoma (MCC) and for advanced bladder cancer. Bavencio is being considered a key long-term growth driver for Pfizer.
Exploring the World of Biosimilars: Pfizer markets two biosimilar versions of J&J/Merck’s blockbuster medicine, Remicade, in the United States – Inflectra and Ixifi. Inflectra was the first biosimilar monoclonal antibody available in the United States. Other biosimilars in late-stage development include biosimilar versions of Roche’s cancer drugs, Rituxan and Avastin and AbbVie’s Humira. A biosimilar version of Herceptin is under review in the United States and EU. Meanwhile, Pfizer is evaluating 14 biosimilar molecules in various stages of development.
Aggressive Cost-Cutting Initiatives: With several of its products either facing or slated to face generic competition, Pfizer is looking toward cost-cutting initiatives to drive bottom-line growth. The company has been undertaking massive restructuring and cost-cutting measures for the past several years. Management is also looking to focus efforts on areas that have high potential like oncology and geographic regions like Asia. Pfizer achieved its cost-reduction goals that were announced in 2009 by the end of 2011, a year earlier than expected, and continues to generate cost savings. The company also achieved its target of bringing about a significant reduction in its annual R&D spend by the end of 2012.
Pfizer faces its share of challenges in the form of genericization of key drugs, supply challenges in the legacy Hospira portfolio, pricing pressure and rising competition. However, we believe Pfizer will be able to overcome these headwinds in 2018.
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