With the recent release of Pfizer’s COVID vaccine, many people have their eyes on the company. Prior to the release of their vaccine, the pharmaceutical company’s stock has been included in many index funds and ETFs. They are one of the leading drug companies for their innovations in healthcare. Their development of the vaccine with the biotech company BioNTech and the emergency use authorization by the U.S. Food and Drug Administration put Pfizer back in the limelight.
The news made the company’s stock price jump drastically. Even though the price was soon adjusted, the stock has continued to trade at high prices before the news came out. Before investing in the company, it is important to keep in mind that companies like Pfizer produce other drugs. Their future is more largely tied to this pipeline of drugs than the COVID-19 vaccine.
Do your research
As a potential investor, it’s important to avoid investing in a company just because of how it did in the past or what the stock price is currently at. You need to do your research. Look at Pfizer’s financial statements, earnings, revenue, projected performance, and other factors to see if it’s a good investment. These kinds of statistics are usually found through whatever broker you use or through a site such as Morningstar.
In 2019, Pfizer (NYSE:PFE) had listed thirty-four commercialized drugs in their annual report. In addition, the COVID vaccine was listed multiple times in their last earnings call. It is understandable why people are so interested in U.S. deaths because COVID-19 is surpassing many of the worst tragedies our country has ever seen.
If you look at recent regulatory actions, their most mentioned product–named Ibrance–will most likely impact shareholders much more than the vaccine.
What is Ibrance?
Ibrance is a drug that is used to treat metastatic breast cancer or breast cancer that has also spread to other parts of the body. It was approved in 2015 and in years since. In addition, it has increased in distribution to women and men. The drug was approved as first-line treatment in 2017 for breast cancer, meaning that it had become the standard that demonstrated the best results. Sales have taken off since its approval growing from $3.1 billion in 2017 to $5.0 billion in 2019.
How does the COVID-19 vaccine compare to the results of Ibrance?
Before its approval in December of 2020, Pfizer and BioNTech stated that their vaccine was at least 90% effective. A few weeks later, they stated it was 95% effective. Now that the vaccine is being distributed across continents, you can start calculating the value of Pfizer. It is slightly complicated as buyers can pay different prices for doses of the vaccine, but analysts predict that sales of the vaccine will be between $13 and $14 billion by the end of 2021.
It is important to remember that there are other vaccines being developed and distributed as well. Johnson and Johnson (NYSE:JNJ) and AstraZeneca (NASDAQ:AZN) pledged that they would not make a profit on the vaccine in the middle of the pandemic. Because of this, pricing on doses from Pfizer is likely to fall off in the future.
In the next few years, Ibrance and the COVID-19 vaccine will continue to greatly impact Pfizer shareholders. However, the COVID-19 vaccine benefit is most likely going to be short-term as more companies will release vaccines. Also, we hope that the pandemic comes to an end. There is the possibility that people will be required to get the vaccine every year, like the flu shot, but that is not certain yet. On the other hand, Ibrance will continue to generate profits although it has failed to bring in an extra $8 billion in revenue because of its lack of ability to treat early-stage breast cancer.
How does Pfizer fit into your portfolio?
Another important aspect to remember is how the company fits into your existing portfolio. Does investing in Pfizer create an imbalance between value and growth stocks? Will it put too much weight on inequality? Will it add too much weight to a certain sector? The answers to these questions can help you better decide if Pfizer is a smart investment for you personally.
Pfizer is a large-cap value company and does not see the same kind of exponential growth as say an up-and-coming technology company. On the other hand, Pfizer does offer a strong dividend and their stock price is less volatile. Because of this, Pfizer could be a great investment if you are looking for less-volatile income-producing value stocks.
If this is the case, you might then wonder how much of your money you should invest in the company. It is then important to weigh questions such as: (1) Do I have enough emergency savings? (2) Am I comfortable with losing access to money invested in Pfizer for at least five years? (3) Can I afford to lose money overall? (4) Have I paid off all of my bills and debt? If you are in a sound financial position, it could be a good idea to consider dollar-cost averaging in which you invest a certain amount at regular periods. This could be weekly or monthly, but it is less risky than investing everything at once.
Overall, Pfizer is one of the leading pharmaceutical companies and potentially a good investment as it is important to diversify your portfolio between various sectors and companies of different sizes. It is essential, however, to remember that there are always risks in buying specific stocks. Although Pfizer is a company everyone is talking about and a company that is doing well presently, it doesn’t mean that their revenue and share price will go up or stay the same moving into the future.