The first installment of a four part “company spotlight” series opens by highlighting a New York based Bio-pharma & Life-Sciences company, Pfizer Inc. (PFE). This organization specializes in the discovery, development, manufacture and marketing of prescription medicines throughout the United States, Europe, Canada, Asia and Latin America. Pfizer’s product portfolio includes branded drugs, vaccines, biosimilars (generic biologic drugs) and consumer health care. Their most notable drugs Xeljanz (auto-immune) and Chantix (smoking cessation) saw an increase in sales which help drive higher than expected earnings for the company in Q4 2018.
Currently, their stock price is trading at $41.90 per share with an attractive dividend yield of 3.41% and a price to earnings ratio of 14 times 2019 earnings estimates. Probably the biggest win for Pfizer in 2018 was an announcement to enter a joint venture with GlaxosmithKline (GSK) to combine their consumer health care businesses into a single entity. Pfizer will own a 32% stake in the new company, with Glaxo owning 68%. Any cost savings yielded from the transaction will add to Pfizer’s earnings and translate into steady dividend growth for long term investors. The fruits of this joint venture with Glaxo will add more new innovative drugs and vaccines to Pfizer’s existing pipeline of prescription medicines at a 50% cost for research and development, once the consumer health care entity is fully operational. An annualized outlook of Pfizer’s return on investment for the next five years by Edward Jones analyst have determined in year one a 24% return on investment, year two a 17% return on investment and year five a 10% return on investment.
Based on the estimated rate of return, I plan on purchasing twenty-five shares of Pfizer Inc. by the end of Q4 2019 that will be held for a period of five to seven years, while re-investing all dividends.
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