Pfizer's Future Depends on Oncology Growth, New Products and operational efficiency

Published
04 Mar 25
Updated
20 Mar 25
Francisco's Fair Value
US$30.62
15.5% undervalued intrinsic discount
20 Mar
US$25.88
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1Y
-10.4%
7D
2.9%

Author's Valuation

US$30.6

15.5% undervalued intrinsic discount

Francisco's Fair Value

I think that Pfizer has a strong pipeline. The aquisition of seagen added many new oncology products that will continue to grow by 14% partially offseting the decline on sales of the covid-19 vaccines. This should keep revenue flat, possibly growing in low to mid single digits in an optimistic scenario. Also, I think they will continue to release many new products that are already in phase 3 of research. If they're able to do this, maintain a 70% operational margin, increase profitability (by cutting costs, expanding margins etc.) and paying down debt, in the long term i see good anual returns (low double digits) from current stock price levels. There is risk for investors in the meantime! Pfizers transition needs to happen fast otherwise Pfizer will have to borrow more money due to the capital nature of the bussiness. Of course, this is not a capital light industry and pfizer debt levels are allready very high when we compare them with free cash flow to equity. Also, there is a risk of a dividend cut wich would harm investors. Investors should be aware of these risks in this turnaround play.

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