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Pfizer Inc PFE

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Morningstar’s Analysis

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Economic Moat




Pfizer Posts Slightly Better-Than-Expected Q2 as COVID-19 Pressures and Generics Weigh on Results

Damien Conover, CFA Sector Director

Analyst Note

| Damien Conover, CFA |

Pfizer reported second-quarter results slightly ahead of our and consensus expectations, but we don’t expect any significant fair value estimate changes based on the minor outperformance. We continue to view the stock as undervalued, with the market likely underappreciating the firm’s strong immunology pipeline and entrenchment in vaccines. Pfizer’s recent stock appreciation appears partly driven by the firm’s progress with a COVID-19 vaccine along with its partner BioNTech, but we would urge caution in ascribing significant value related to the COVID-19 vaccine; a long duration of COVID-19 vaccine cash flows seems unlikely due to the probable entry of competitive, not-for-profit vaccines and potentially less demand following the pandemic period. Nevertheless, Pfizer’s remarkable ability to potentially bring a vaccine to the market in late 2020 shows the strength of the firm’s ability to develop innovative treatments, a core element supporting its wide moat rating.

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Company Profile

Business Description

Pfizer is one of the world's largest pharmaceutical firms, with annual sales over $50 billion. Pfizer also spends a leading amount on research and development, close to $8 billion annually. While Pfizer historically sold many types of healthcare products and chemicals, now, prescription drugs and vaccines account for the majority of sales. Top sellers include pneumococcal vaccine Prevnar 13, neuroscience drug Lyrica, cancer drug Ibrance, cardiovascular treatment Eliquis, and immunology drug Xeljanz. Pfizer sells these products globally, with international sales representing close to 50% of its total sales. Within international sales, emerging markets are a major contributor, representing over a fifth of total firm sales.

235 East 42nd Street
New York, NY, 10017
T +1 212 733-2323
Sector Healthcare
Industry Drug Manufacturers - General
Most Recent Earnings Mar 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 88,300