To The Moon

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Under the double pressure of falling COVID-19 sales and the patent cliff, $Pfizer(PFE)$ 's stock price has plunged more than 50% from its peak in late 2021 and over 30% in the past 12 months. Sales and profits have also taken a nosedive.

Still, there are five reasons to buy the drugmaker right now.

1.COVID-19 Has Hit Bottom

The recent decline in Pfizer's stock price can largely be attributed to the decreasing demand for COVID-19 products, such as the Comirnaty vaccine and Paxlovid oral drug. Fortunately, the company's COVID-19 sales are expected to have bottomed out, greatly reducing inventory impairments and year-over-year performance pressure. Even better, the company expects to launch a combination COVID-flu vaccine in 2025, which could boost sales next year.

2.New Products and Indications

In the coming years, Pfizer's patents for blockbuster drugs like Eliquis, Ibrance, Vyndaqel, and Xtandi will expire, and the patent cliff is expected to reduce the company's annual revenue by about $17 billion by 2030.

However, new products and indications for existing products expected in the first half of 2024 are projected to add approximately $20 billion in annual revenue. Pfizer's research and development pipeline and growth potential are impressive, including respiratory syncytial virus (RSV) vaccine Abrysvo, multiple myeloma drug Elrexfio, and migraine therapies Nurtec and Vydura.

3.External Acquisitions

While internal drug development may help offset revenue losses from the patent cliff, robust growth for Pfizer may also depend on external business development activities, such as acquisitions. The company expects these activities to add $25 billion in new annual revenue by 2030. Recently,Pfizer announced the acquisition of $Seagen(SGEN)$ , whose anticancer drugs should add more than $3 billion in sales this year and are poised for significant growth in the coming years.

4. The Price Is Right

Many investors are focusing on Pfizer's current struggles and overlooking its prospects. As a result, the drugmaker's valuation has plunged, with a trailing P/E ratio of just 12.7, significantly lower than the 19.4 for the healthcare sector of the $S&P 500(.SPX)$ .

5.Generous Dividends

Pfizer investors don't have to sit and wait for the stock price to rebound. They can also earn handsome dividends in the meantime. Pfizer's dividend yield is nearly 6%, ranking among the top in biopharmaceutical stocks, and the company has increased its dividend every year since 2010. During the company's fourth-quarter earnings call, CFO David Denton listed dividend growth as a top priority for capital allocation.