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5 Reasons Why Investors Should Bet on Pfizer (PFE) Stock

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Pfizer Inc. (PFE - Free Report) is known not just for its medicines and vaccines but also for its consumer healthcare products. This New York-based company offers products like Prevnar, Lyrica, Lipitor and Celebrex among others.

Here are five reasons to invest in the stock..

Favorable Rank, Rising Shares Price and Estimates: Pfizer has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pfizer’s shares have outperformed the large-cap pharma industry this year so far. The stock has returned 23.7% in the said timeframe compared with the industry’s rise of 7.7%. Pfizer’s outperformance was backed by decent quarterly results, positive news flow and regulatory updates.

 

 

Pfizer’s earnings performance has also been pretty impressive, with consistent positive surprises. The average earnings beat for the last four quarters is 6.46%. Meanwhile, estimates for 2019 have increased 1% in the past 60 days.

Strong Oncology Portfolio/Pipelines: Pfizer boasts a strong presence in oncology with key marketed drugs being Ibrance (breast cancer), Sutent (kidney cancer), Xalkori (lung cancer) and Xtandi (prostate cancer).

Pfizer’s newest immunotherapy, Bavencio, an anti-PD-1 antibody, is being considered a significant top-line driver for this New York-based pharma giant.

Bavencio is already approved in metastatic Merkel cell carcinoma in the United States, Europe and Japan. It also received accelerated approval for second-line treatment of locally advanced or metastatic urothelial carcinoma in the United States. Pfizer is focusing continuously on growing and expanding Bavencio into new indications and markets globally.

Two leukemia treatments — Besponsa for relapsed/refractory acute lymphoblastic leukemia (ALL) and Mylotarg for newly diagnosed CD33-positive acute myeloid leukemia (AML) — were approved in the United States in 2017 and have started adding to sales.

Last month, Pfizer gained FDA approval for a new cancer drug, dacomitinib, for the first-line treatment of metastatic non-small cell lung cancer (NSCLC) in patients with EGFR activating mutations. Pfizer has three other cancer medicines under FDA’s priority review — glasdegib, lorlatinib and talazoparib. Decisions on all these medicines are expected later this year.

Meanwhile, Pfizer is also working on expanding the label of Ibrance and Xtandi.

Promising Non-Oncology Pipeline: Other than oncology, Pfizer has committed significant resources toward the development of treatments for metabolic disease and cardiovascular risks, rare diseases, immunology, inflammation and vaccines as well as immuno-oncology. Pfizer expects approximately 25 to 30 drug approvals through 2022. Of these, around 15 products have blockbuster potential, including line-extensions for Xtandi, Ibrance & Xeljanz/XR. Half of these potential blockbusters are expected to receive approval by 2020.

Interesting non-oncology pipeline candidates include Vyndaqel/tafamidis (transthyretin cardiomyopathy), PF-04965842 (JAK selective inhibitor for atomic dermatitis) tanezumab (osteoarthritis pain, chronic low back pain, and cancer pain) and fidanacogene elaparvovec/PF-06838435 (gene therapy for hemophilia B).

These new products and line extensions should bring in additional sales for both the companies in the future quarters.

Active on Licensing/Collaboration Front: Pfizer, in order to build its long-term portfolio, is tapping external sources through licensing deals in the past few years and are targeting more such deals. Pfizer has co-marketing deals with Merck (MRK - Free Report) for new diabetes medicine, Steglatro; with Bristol-Myers (BMY - Free Report) for Eliquis; Japan’s Astellas for Xtandi and Merck KGaA for Bavencio.

Attractive Valuation: Pfizer is trading at a discount to the Zacks Large Cap Pharmaceuticals Industry in terms of forward twelve months price-to-earnings ratio (P/E F12M), which is the most appropriate multiple for valuing large-drug companies.

The multiple currently stands at 14.63 for Pfizer, representing a discount to 15.46 for the industry.

 

 

Though the stock is presently trading at a one-year high, the current valuation is near its five-year median, which suggests that valuation is quite reasonable and the stock still has some upside left.

Conclusion

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 that Pfizer will be able to overcome these headwinds.

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