Everyone knows about Pfizer (PFE) these days; it was the first company — along with partner BioNTech (BNTX) — to have a COVID vaccine approved for general use, recalls Gordon Pape, editor of Internet Wealth Builder.
Their vaccine has proven to be highly effective with minimal side effects and now Pfizer has developed an anti-viral oral drug to combat the coronavirus that recently received FDA emergency approval.
The share price is finally starting to reflect the fact this is not just another staid old big pharma company. After bumping along below $40 for most of the past five years, the price began moving up sharply in November and recently touched an all-time high. But it is still trading at a reasonable p/e ratio of 16.5.
On Dec. 22, Pfizer announced it had received approval from the FDA for the emergency use of its anti-viral pill, Paxlovid, for COVID patients with mild to moderate symptoms.
The decision was based on test results that showed an 89% reduction in the risk of COVID-19-related hospitalization or death from any cause in adults treated with the medication within three days of symptoms appearing. No deaths occurred in the treatment group compared to nine deaths in the placebo group by Day 28.
Pfizer is increasing its quarterly cash dividend by 2.6% to $0.40 for the first-quarter 2022 dividend, payable March 4. This will be the 333rd consecutive quarterly dividend paid by the company. However, because of the rise in the share price, the yield is down to 2.8%, even with the latest increase.
Pfizer is the hottest name in pharmaceuticals right now. Demand for its vaccines will continue to grow at least through 2022 and perhaps beyond as it’s becoming increasingly apparent that annual boosters will be needed, just as with the flu shot. Its new drug, Paxlovid, will probably be the first of a new line of anti-viral medications.
While we’ve seen a significant price increase, I think there’s another 30-40% upside potential over the next year, with limited downside risk. Pfizer is my conservative pick for 2022.