The global financial markets have been going through turbulent times. The last two years had been particularly difficult as the economy struggled to recover from the pandemic. While things are starting to return to normalcy, new challenges have emerged. Most notable being the risk of rising inflation and crisis led by Russia-Ukraine conflict. This instability will push investors towards safe stocks.
Annual inflation rate in the U.S. has surged to7.9%in February 2022. This is the highest inflation rate in the last 40-years. Energy prices have been the biggest contributor to inflation.
The conflict in the Europe shall further exacerbate the global energy crisis, leading to higher oil prices and supply-chain constraints.
As such, the market outlooks appear uncertain with inverted yield curve pointing towards a likelihood of economic recession.
According toGoldman Sachs(NYSE:GS) analyst, Jan Hatzius, there is a20%-35% chance of economy going into recessionnext year based on the yield curve. U.S. GDP growth forecast is also slashed to 1.75% (from 2%) for 2022.
Given looming concerns, investors should plan to invest in low-beta, recession-resistant stocks to withstand market downturns.
Pfizer (PFE)
Pfizer (NYSE:PFE) is the second largest biopharma company in the world that innovates, develops, and markets its medicines. Lipitor, Celebrex, and Viagra are some of its well-known medicine inventions.
The company’s Covid-19 Comirnaty vaccine (in collaboration with BioNTech) dominates the U.S., European markets, and other international markets with 70% market share. Its ability to generate higher levels of antibodies has led to superior vaccine adoption. Especially when compared to the vaccines developed by other players, like AstraZeneca (NASDAQ:AZN) and Johnson & Johnson (NYSE:JNJ).
In fact, in the U.S., currently only Pfizer’s vaccines can be administered to children aged five years and above. In 2021, the company’s operational revenues increased by an impressive 92%, mostly due to its sale of Comirnaty vaccine.
Going forward, Pfizer should benefit from its roll out of antiviral pill for treating Covid-19 called Paxlovid. Additionally, Comirnaty booster doses will also support growth.
Other than that, the company has made significant blockbuster deals (like Arena Pharmaceuticals) that could be beneficial to the shareholders in the long run. The company is expected to report on its development of ulcerative colitis patients and Etrasimod. If these projects are successful, they could begin adding revenue to Pfizer’s top line in 2023.
Let’s also not forget about the company’s dividend profile for income seeking investors. Pfizer has an attractive dividend yield of 3.1%. Its strong financial position should allow it to maintain its dividend payments in the future.
PFE stock is currently trading at a significant discount to its peers at a price to earnings ratio (P/E) of 7.24x (versus sector average of 21.59x). Given, the company’s long-standing history of successful innovations and pipeline of products, it is worth investing in this stock.
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