Billionaires' Bets on Pfizer: Should You Follow Suit?
Wednesday, Nov 27, 2024 5:38 am ET
2min read Pfizer, one of the world's most prominent pharmaceutical companies, has been a subject of interest for billionaire investors lately. Despite a 49% decline in its stock price since late 2022, prominent investors like Jeff Yass and Igor Tulchinsky have been scooping up shares, raising questions about whether individual investors should follow their lead.
Pfizer's recent struggles can be attributed to patent cliffs looming for several of its key drugs. The company's blood thinner Eliquis, a collaboration with Bristol Myers Squibb, faces a patent expiration in 2026, while its breast cancer treatment Ibrance and prostate cancer treatment Xtandi could lose exclusivity in 2027. Competition from similar drugs has also impacted sales for Ibrance, with sales falling 10% year-over-year in the third quarter.
However, Pfizer's strategic acquisitions, such as Biohaven and Padcev, have bolstered its pipeline and expanded revenue streams. Biohaven's migraine treatment Nurtec saw Q3 sales rise 45% YoY, while Padcev's bladder cancer therapy surged to an annualized $1.6B, becoming the most prescribed treatment for advanced-stage tumors. These acquisitions align with Pfizer's strategy of investing in next-generation products, which should support long-term growth and dividend payouts.
Pfizer's dividend history and current yield are also attractive to investors. The company has raised its dividend for 15 consecutive years, and the stock currently offers a substantial 6.4% yield, more than double the market average. This high yield, combined with Pfizer's track record of dividend growth, makes it an appealing option for income-seeking investors.
Upcoming patent expirations and potential competition for key drugs do pose challenges to Pfizer's valuation and long-term prospects. However, the company's wide economic moat and solid operational sales growth for its non-covid product line further support its valuation. Although competition for existing drugs and potential pipeline disappointments pose challenges, Pfizer's strong track record and management execution make it an attractive investment opportunity.
Pfizer's recent earnings reports and revenue growth compare favorably to industry peers and analyst expectations. The company reported Q3 earnings of $5.04 billion, up 6% YoY, and revenue of $22.4 billion, up 14% YoY. Its non-COVID product line saw operational sales growth of 14%. Analysts expected earnings of $4.87 billion and revenue of $21.2 billion. Pfizer's revenue growth outperforms the industry average of 7%.
In conclusion, billionaires like Jeff Yass and Igor Tulchinsky are betting on Pfizer's long-term prospects despite recent patent cliffs and market pressures. They see value in Pfizer's pipeline, including Nurtec for migraines and Padcev for bladder cancer, which could offset losses from expiring patents. Pfizer's dividend yield of 6.4% also attracts income-seeking investors. However, investors should weigh the risks of losing exclusivity for key drugs and increased competition. By assessing Pfizer's fundamentals and the billionaires' investment theses, investors can make informed decisions on whether to follow their lead or seek alternative opportunities.
Pfizer's recent struggles can be attributed to patent cliffs looming for several of its key drugs. The company's blood thinner Eliquis, a collaboration with Bristol Myers Squibb, faces a patent expiration in 2026, while its breast cancer treatment Ibrance and prostate cancer treatment Xtandi could lose exclusivity in 2027. Competition from similar drugs has also impacted sales for Ibrance, with sales falling 10% year-over-year in the third quarter.
However, Pfizer's strategic acquisitions, such as Biohaven and Padcev, have bolstered its pipeline and expanded revenue streams. Biohaven's migraine treatment Nurtec saw Q3 sales rise 45% YoY, while Padcev's bladder cancer therapy surged to an annualized $1.6B, becoming the most prescribed treatment for advanced-stage tumors. These acquisitions align with Pfizer's strategy of investing in next-generation products, which should support long-term growth and dividend payouts.
Pfizer's dividend history and current yield are also attractive to investors. The company has raised its dividend for 15 consecutive years, and the stock currently offers a substantial 6.4% yield, more than double the market average. This high yield, combined with Pfizer's track record of dividend growth, makes it an appealing option for income-seeking investors.
Upcoming patent expirations and potential competition for key drugs do pose challenges to Pfizer's valuation and long-term prospects. However, the company's wide economic moat and solid operational sales growth for its non-covid product line further support its valuation. Although competition for existing drugs and potential pipeline disappointments pose challenges, Pfizer's strong track record and management execution make it an attractive investment opportunity.
Pfizer's recent earnings reports and revenue growth compare favorably to industry peers and analyst expectations. The company reported Q3 earnings of $5.04 billion, up 6% YoY, and revenue of $22.4 billion, up 14% YoY. Its non-COVID product line saw operational sales growth of 14%. Analysts expected earnings of $4.87 billion and revenue of $21.2 billion. Pfizer's revenue growth outperforms the industry average of 7%.
In conclusion, billionaires like Jeff Yass and Igor Tulchinsky are betting on Pfizer's long-term prospects despite recent patent cliffs and market pressures. They see value in Pfizer's pipeline, including Nurtec for migraines and Padcev for bladder cancer, which could offset losses from expiring patents. Pfizer's dividend yield of 6.4% also attracts income-seeking investors. However, investors should weigh the risks of losing exclusivity for key drugs and increased competition. By assessing Pfizer's fundamentals and the billionaires' investment theses, investors can make informed decisions on whether to follow their lead or seek alternative opportunities.
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