That’s based on:
“1) our positive view of the company’s top-line growth and potential for margin leverage through the mid-2020s;
2) a longer-than-projected tail from the COVID-19 vaccine business;
3) a rich pipeline, with multiple de-risking catalysts near term; and
4) financially solid fundamentals with an attractive valuation, relative to peers,” BMO said
Pfizer recently traded at $51.19, up 0.42%. It has soared 24% in the past month amid enthusiasm for its Covid medicines.
As for valuation, Pfizer trades at only 7.4 times estimated earnings for the next 12 months, compared to its five-year average of 13.2, according to Morningstar. Competitor Merck trades at 11.8 times estimated earnings, compared to its five-year average of 14.7.
Morningstar analyst Damien Conover likes Pfizer, giving it a wide moat. But he thinks it’s a bit overvalued, putting fair value at $45.50.
“Pfizer’s announced $5.3 billion supply deal with the U.S. government for COVID-19 treatment Paxlovid combined with likely additional deals increases our fair value estimate to $45.50 from $44,” he wrote Thursday.
Overall, “Pfizer's foundation remains solid, based on strong cash flows generated from a basket of diverse drugs,” Conover said.
“The company's large size confers significant competitive advantages in developing new drugs. This unmatched heft, combined with a broad portfolio of patent-protected drugs, has helped Pfizer build a wide economic moat around its business.
“The patents give the company time to develop the next generation of drugs before generic competition arises.”