This Beaten-Down Stock Just Gave Investors More Good News: Is it a Buy?

The past three years have been disappointing for Pfizer (NYSE: PFE): The drugmaker's revenue, earnings, and stock price have generally moved in the wrong direction. However, it hasn't been all bad -- Pfizer has made some progress on the clinical and regulatory fronts with several brand-new approvals.

And now the company's financial results are improving. Let's look into Pfizer's latest quarterly update and decide whether its shares are worth investing in today.

Strong financial results

Pfizer's revenue had been southbound because its coronavirus-related revenue dropped off a cliff. That was good news for everyone else -- it was a sign of a receding pandemic. However, COVID-19 is here to stay, and in the third quarter, Pfizer's sales in this market helped it turn things around.

Revenue came in at $17.7 billion, an increase of 31% year over year, which is beyond excellent for a pharmaceutical giant. The coronavirus medicine Paxlovid contributed $2.7 billion to the top line, versus just $202 million in the third quarter of 2023. Comirnaty, Pfizer's famous vaccine, saw sales grow 9% year over year to $1.4 billion.

While Pfizer's acquisition of Seagen in December 2023 also played a role, this quarter once again highlights the continued importance of Pfizer's work in the COVID-19 space. In fact, the drugmaker raised its revenue and earnings-per-share (EPS) guidance for the fiscal year 2024, anticipating better sales for these products.

In announcing second-quarter results, Pfizer said it expected revenue of between $59.5 billion and $62.5 billion and adjusted EPS of $2.45 to $2.65. Those were also upward revisions. Now, the company projects revenue of between $61 billion and $64 billion and EPS in the $2.75 to $2.95 range.

Patience will be rewarded

Pfizer's revenue from its coronavirus portfolio will be somewhat cyclical; people are more likely to get vaccinated in the fall and winter. However, the company's prospects extend far beyond this single product line. It has a vast portfolio and a deep pipeline with more than 100 programs.

Like many other drug developers, Pfizer hopes to carve out a niche in the weight loss space. Management has said that its oral anti-obesity medicine could be the second of its kind to market. There is a need for oral solutions since the current leaders in the field, including Wegovy and Zepbound, are administered via weekly injections.

Many patients would prefer a daily oral pill, and that's what Pfizer is working on. One of the company's candidates, danuglipron, is in phase 2 studies. It has several other candidates in early-stage trials. The weight loss market is expected to skyrocket in the coming years, possibly soaring past the $150 billion mark by the early 2030s.

Other important opportunities will likely come from Pfizer's work in oncology, which it plans to ramp up following its acquisition of Seagen. Pfizer's goal was to become a leader in oncology, one of the largest therapeutic areas in the industry. Seagen was already an impressive player in this niche, but with its new parent's backing, it could become even more so.

Pfizer's recovery won't happen overnight, but the company has already laid the groundwork for future success. The investments it made in its pipeline, the key acquisitions it made thanks to its coronavirus-related windfall, and the divestiture of a couple of segments that were deadweights on its bottom line will slowly pay off.

Furthermore, Pfizer is a decent income stock: Its forward yield is currrently 5.9%, and payouts have increased by over 61% in the past decade. Dividend seekers focused on the long game can safely invest in this company.

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.