Pfizer (NYSE: PFE) shares were trading about 8% lower despite the company's strong Q4 earnings report. One factor is that the omicron wave has sharply receded over the past couple of weeks and case counts are lower by more than 60%. Along with this, we are seeing a relaxation in terms of attitudes, mandates, and the potential need for more boosters.
Overall, Pfizer has been a big winner during the pandemic especially as it was one of the first companies to successfully develop a vaccine. Over the past year, shares are up 46% even with a 15% loss YTD. However, it is interesting to note that the stock made a higher low during the omicron wave. The stock is also quite reasonably valued with a forward P/E of 9.6 which is substantially cheaper than the S&P 500's (NYSE: SPY) forward P/E of 19.
Inside the Numbers
In Q4, Pfizer reported earnings per share of $1.08 which topped expectations of $0.87 per share. Revenue also came in slightly higher than expectations at $23.84 billion vs. $24.12 billion. It attributed its miss to weakness in its internal medicine and hospital segments, while the coronavirus vaccine accounted for half of the company's revenue. For the full year, Pfizer expects $98 billion to $102 billion in sales and earnings per share between $6.35 and $6.55.
The company also expects record-high revenue in 2022 with $32 billion of revenue due to the coronavirus vaccines and $22 billion of the antiviral coronavirus treatment, Paxlovid. It also said that estimates could increase depending on deals it makes with various countries.
It also sees more upside in using mRNA technology to develop treatments for genetic diseases. It's also investing in new technology that would decrease the time to produce vaccines. It also has mRNA vaccines in development or undergoing trials for the flu and shingles. It's also working on a vaccine for the omicron variant and one for children under the age of 5.
When looking at Pfizer's fundamentals, the only way to rationalize it is that investors are seeing the jump in earnings and revenue due to the coronavirus as being temporary. Nevertheless, the company with total profits in the $100 billion range will fuel new innovation, share buybacks, and dividends. In the near term, the stock is likely to remain under pressure as the coronavirus continues to be less of concern especially as we enter warmer months.