Pfizer Inc (PFE)

One of the world's great drug companies. Peaked with Covid vaccine sales, stock's come off. Billions of dollars in potential new drugs in the pipeline. Has its own weight loss drug, though approval is some years away. Won't lose a lot of money, and upside potential is huge. Yield is 4.20%. 

Great business that has performed well.
Federal government blocking recent M&A a concern for shareholders.
Long term, excellent business.
High margins with excellent management team.

They used their sizeable cash flow for acquisitions. The question is have they overpaid. He still likes it but needs to see execution on their increased spending in R&D and M&A.

Passing Covid-19 pandemic negatively affecting business.
Sales not as strong after pandemic ending.
Betting on recovery of sales (not worth taking).
Would not recommenced shares in company right now.
Wait for share price to fall.

They report Tuesday. Are considered a Covid stock. They're buying Seagen for $43 billion so they can build an anti-cancer franchise. They need this. Pfizer has a strong pipeline, but when will they get behind their migraine drug, which was part of an acquisition? They're doing nothing with it.

The problem with these drug companies is that they depend on their drugs coming off-patent, so do they have a pipeline to replace that? Prefers JNJ because it has other businesses to cushion that loss. PFE is defensive and pays a good dividend. Look for M&A developments too. Not trading at a high PE and are well-financed. Healthcare is highly defensive.

Good dividend. Growth rate is pretty negative, but improves from 2023-2025 at close to 14% and 9.5x 2025. At cheap enough levels to start buying. Like the Dogs of the Dow theory. Pan for gold when a name's being ignored, and this is one of those.

Covid earnings are less and he has trimmed a lot. It is now at an attractive price in the low 40's. If you wanted to diversify you could switch half your holdings into Eli Lilly and/or Merck.

Would hold shares with ~4% dividend yield.
Believes demand for drugs will continue despite Covid-19 ending.
Demand for healthcare will continue to rise.
Current share price is over sold.
P/E ratio at 6x very attractive.

Pfizer vs. JNJ

That just bought a company, and he immediately thought of the 2008 Wyeth acquisition (at the top of that cycle), and right after shares plunged. Pfizer's timing has not improved. Better to buy JNJ which is doing spin-offs that should benefit the company. JNJ is well-managed and regularly raises its dividend.

Prefers ABBV. Main overhang to PFE is what happens to the vaccine franchise now that we're on the other side of Covid? PFE will need other engines, it's a show-me story. ABBV is a leader in immunology. Humira is coming off patent, which will compress earnings, but that's well-known by the market. Its pipeline will fill the gap, plus Botox business.

Believes company is excellent.
Very strong sector in healthcare.
Demand for products rising.
Would recommend for the long term investor.
Excellent r&d product development.
Strong balance sheet. 
Excellent upside (30%) potential. 
~4% dividend yield strong.

Going into slower growth, defensive stocks like those in healthcare tend to do very well. Benefited incredibly from Covid. Great business. Used to be much more broad-based, but sold them all off. Drugs take a long time to produce. Great dividend yield.

Good cash flow and pays a 3.7x dividend. Cheap at 12x PE. Good cardio drug in the pipeline, looking promising. Shares are down lately because of a general rotation and society is getting indifferent to Covid and vaccines. Management sees 7-9% revenue growth outside Covid vaccines. Strong balance sheet. Offers defence and offence.