Pfizer Inc. (NYSE: PFE) is in an enviable position these days. The Pfizer-BioNTech vaccine has become the hottest product since the iPhone.
For example, the European Union (EU) signed a contract for 1.8 billion Pfizer-BioNTech vaccine doses, Reuters reports. The contract includes over 900 million initial doses and another 900 million booster shots, European Commission head Ursula von der Leyen tweeted.
Moreover, the EU will make the Pfizer-BioNTech vaccine the focus of its vaccination efforts. The New York Times reports the EU is turning to the BioNTech shot because of problems with the AstraZeneca (NASDAQ: AZN) vaccine.
Notably, The Atlantic’s Kaitlyn Tiffany notes “The internet has decided that Pfizer is significantly cooler than Moderna – but why?” Similarly, The South China Morning Post’s Daniel Langer observes, “According to the TikTokverse, anyone who gets that other mRNA vaccine (which, for the record, is comparable in almost every way), is a “peasant.”
The other mRNA vaccine is Moderna (MRNA), which is slightly less effective than the Pfizer-BioNTech. For the record, the Pfizer-BioNTech vaccine is 95.3% effective in preventing infection and the Moderna vaccine is 94.1% effective at preventing laboratory-confirmed COVID-19 illness.
Yet the Pfizer-BioNTech offering is the “hot people’s vaccine,” Langer observes. I imagine people prefer the Pfizer-BioNTech because it is slightly more effective. People want more protection because the coronavirus can kill you.
How Much Money is Pfizer Making?
Pfizer Inc. (PFE) is making money from the vaccine it shares with BioNTech SE (NASDAQ: BNTX). For example, Pfizer’s quarterly revenues rose from $11.684 billion on 31 December 2020 to $14.582 billion on 31 March 2021.
Similarly, the quarterly gross profit rose from $7.926 billion on 31 December 2020 to $10.371 billion on 31 March 2021. Impressively, the quarterly operating income rose from -$2.354 billion on 31 December 2020 to $4.679 billion on 31 March 2021.
Stockrow estimates that Pfizer’s quarterly revenues grew by 21.23% in the quarter ending on 31 March 2021. That growth followed three straight quarters of revenue shrinkage. Pfizer’s revenue growth fell by 7.91% in the quarter ending on 31 December 2020, for example.
Pfizer claims its COVID-19 vaccine sales will rise by 70% to $26 billion by the end of 2021, Reuters reports. I think those estimates could be low because the US Food and Drug Administration (FDA) has approved the Pfizer-BioNTech vaccine for 12-to-15-year-olds, NPR reports. Thus, tens of millions of frightened parents could generate new profits for Pfizer by dragging their kids to vaccination.
Pfizer vs. The Variants
Variants could be another moneymaking opportunity for Pfizer. Data from Qatar shows people who who received two doses of the Pfizer–BioNTech vaccine were 75% less likely to develop a case of COVID-19 caused by B.1.351 than were unvaccinated people, Nature reveals.
The B.1.351 is the feared South-African variant of the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). I think studies such as the one in Qatar drove the EU Commission’s decision to buy 1.9 billion Pfizer-BioNTech doses for its citizens.
The Pfizer-BioNTech Vaccine is more effective
Another selling point a study by Israel’s Health Ministry that shows the Pfizer-BioNTech vaccine is 96.7% at preventing COVID-19 deaths, 95.3% effective in preventing infection, and 95.7% in protecting against serious coronavirus cases. In contrast, the Centers for Disease Control and Prevention (CDC) estimates the Johnson & Johnson/Janssen vaccine is 66.3% effective.
Similarly, Sinopharm Group’s SinoVac is only 78% effective, and the AstraZeneca is 79% effective. Yet another selling point for Pfizer-BioNTech is a recent COVID-19 spike in the Seychelles Islands, the world’s most vaccinated nation.
The Washington Post reports the Seychelles are experiencing an “unprecedented spike in coronavirus cases” because of less effective vaccines. The Seychelles government used the AstraZeneca and SinoVac vaccines to vaccinate 60% of its population. Yet, Rand Corporation epidemiologist Jennifer Huang Bouey, estimates under 49% of the Seychelles’ population is immune to COVID-19.
Thus COVID-19 spikes frighten governments so they call Pfizer for help. Consequently, I think Pfizer will experience a massive boom in sales.
What Value Does Pfizer Have?
No Pfizer (NYSE: PFE) operating cash flow number for the quarter ending on March 31, 2021, is available. However, Pfizer reported a quarterly operating cash flow of $5.625 billion on 31 December 2020.
Pfizer’s financial numbers show developing a new vaccine is expensive. For instance, Pfizer reported quarterly financing cash flows of $9.156 billion on 30 June 2020 and -$13.787 billion on 31 December 2020. That means Pfizer borrowed $9.156 billion and paid $13.787 in debt.
Consequently, Pfizer quarterly ending cash flows of -$218 million on 30 September 2020 and $198 million on 31 December 2020. Impressively, in 2020 Pfizer’s total debt fell from $53.474 billion on 31 December 2019 to $41.271 billion on 31 December 2020.
I consider Pfizer a great company because it paid debts and spent billions to develop a profitable product (the vaccine) at the same time. Interestingly, Pfizer reported a quarterly investing cash flow of $8.33 billion on 31 December 2020.
However, Pfizer (PFE) added cash and lost value in 2020. To explain, Pfizer’s cash and short-term investments grew from $9.830 billion on 31 December 2019 to $12.221 billion on 31 December 2020. In contrast, Pfizer’s total assets fell from $167.489 billion on 31 December 2019 to $154.229 billion on 31 December 2020.
Pfizer is a good stock
I consider Pfizer Inc. (NYSE: PFE) an interesting value investment because it is cheap. Mr. Market paid $39.50 for Pfizer on 11 May 2021.
Moreover, Pfizer is a stable company. Mr. Market paid $36.09 for Pfizer on 11 May 2020. Additionally, Pfizer will pay a 39₵ dividend on 4 June 2021.
The dividend rose from 38₵ on 1 September 2020. Thus, Pfizer’s dividend grew during the pandemic year. Over Pfizer shares paid an annualized dividend of $1.56 and a dividend yield of 3.98% on 7 May 2021.
Thus I consider Pfizer the best vaccine stock out there today. In comparison, Mr. Market paid $201.72 for BioNTech SE (NASDAQ: BNTX) on 11 May 2021. BioNTech’s price grew from $85.73 on 4 January 2021. Plus, BioNTech does not pay a dividend.
Currently, I consider Pfizer (PFE) a value investment and a bargain in biotech stocks. I expect Pfizer’s stock price to explode in 2021 as the world demands a vaccine that works. Pfizer will make that money because it has that vaccine.
Originally published at https://marketmadhouse.com on May 10, 2021.
