Pfizer Is a Dirt-Cheap High-Yield Stock, But Is It a Buy?

Of late, pharmaceutical behemoth Pfizer Inc.’s PFE stock has struggled, but it remains a bargain with generous dividends. Its financials aren’t in bad shape either. So, is it the right time to bet on the Pfizer stock? Let’s explore – Pfizer Is Now a High-Yield Bargain StockPfizer is currently a high-yield quality stock trading at reasonable valuations, indicating a margin of safety that surely curtails investment risks. With the stock market subject to bouts of volatility due to President Trump’s tariffs, Pfizer’s dividend income should be particularly attractive to investors. Pfizer’s dividend yield looks tempting at 6.5%, while the company hiked dividends 5 times over the past five years. Its payout ratio presently sits at 54% of earnings. Check Pfizer’s dividend history here.Image Source: Zacks Investment ResearchPresently, Pfizer looks like a discounted stock as well. This is because, according to the price/earnings ratio, Pfizer stock trades at 8.8X forward earnings. In comparison, the Large Cap Pharmaceuticals industry’s forward earnings multiple is 17.17.Image Source: Zacks Investment ResearchMore Reasons to be Bullish on PfizerOther than trading at a low earnings multiple and providing consistent dividends, Pfizer is actively seeking acquisitions to enhance growth and its pipeline. Pfizer's growth is boosted by Nurtec ODT, acquired from Biohaven and Padcev from the Seagen acquisition.By 2030, Pfizer aims to add $25 billion to its top line. Pfizer has already boosted its revenues by almost $20 billion, with the acquisition of oncology company Seagen, a significant contributor. The addition of Seagen helped the company generate $3.4 billion in sales last year, marking a 38% increase on a pro forma basis.Pfizer expects substantial growth in the oncology segment in the next five years. It aims to introduce three more blockbuster drugs for cancer treatment, each estimated to generate more than $1 billion in annual sales. Pfizer, by the way, intends to achieve $1.5 billion in net cost savings by 2027 through its Manufacturing Optimization Program and currently has a strong debt profile. Pfizer’s $20.5 billion in cash is sufficient enough to meet its short-term debt obligations of $6.9 billion. Should I Buy Pfizer Stock Now?One should undoubtedly hold onto the Pfizer stock, banking on meaningful acquisitions and sturdy financial conditions. Of course, being cheap at the current trading levels and cushioning dividends against market declines should also entice new investors. However, Pfizer does have challenges ahead. Sales of the company’s Covid-19 products are much less than they were amid the pandemic. Sales of Comirnaty and Paxlovid were about $11 billion in 2024, down from $56.7 billion in 2022. Moreover, some of Pfizer’s products may face patent expirations soon, which may impact the company. Hence, those willing to buy shares of Pfizer must wait patiently for further catalysts, driving share price gains.Currently, Pfizer has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Pfizer Inc. (PFE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks