PFE - Pfizer: Offsetting The LOE Cliff Crisis With 6 New Potential Blockbuster Drugs

2024-05-21 10:00:00 ET

Summary

• Pfizer shares have lagged behind the pharma rally due to inflated expectations, one-time losses, write-offs, and the Seagen acquisition.
• The company is expecting an LOE wave with 6 names facing patent expirations, leading to a $17 billion sales decline from 2025 and $15 billion from 2023 to 2030.
• However, Pfizer has other 6 future blockbuster drugs that I expect to completely offset the patent cliff.
• The company's non-COVID portfolio is growing at a record pace.
• Pfizer offers attractive dividends and sliding valuation as forward P/E 2025 is at 10x, suggesting almost a 30% upside.

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Main thesis

Despite a recent bounce, Pfizer ( PFE ) shares are still far behind the pharma rally as inflated expectations, one-time losses, write-offs, and the Seagen acquisition have pressured the company. At first glance, the future doesn't look bright either because at least six names are expected to lose their exclusivity in the next five years, and it should be difficult to find a decent replacement for the cash flows from these drugs. However, I see massive opportunities in the portfolio as six new potential blockbusters (drugs with annual revenue potentially greater than $1 billion) can become a new cash-generating machine offsetting the patents' expiration. ...

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