Subject: Re: Pfizer / pounding the table.
Lux,

However, they do not match that thesis - Pfizer made record earnings while it's price dropped in an identical way previously - so I would suggest that simple narratives are not usually correct ones.

Re: stock prices, there are often many reasons that account for price swings. However, the one thing, above all, that usually drives the valuation of most stocks'over a reasonable period of years'is net earnings growth, lack there of, or falling earnings year over year. So, to my mind, one of the go-to things to reach for when wondering about a falling, or rising, stock price is earnings history, reported earnings, and earnings projections. Earnings are important, but so are other factors when considering whether a stock is a buy, hold, or sell.


For example, look at the "Pharma" section in the middle of this 3-month price change heatmap. JNJ -12%, LLY -12%, PFE -16%, BMY -12%, AMGN -17%, BIIB -11%. Even considering other categories of traditional defensive stocks we see the same sort of thing. CVX -12%, COP -16%, EOG -19%, OXY -16%. It's not a universal truth; XOM has held up, MRK and ABBV have held up. Consumer defensive (PG, KO, CL) is only -5%. But hopefully you see my point.

I see your point and acknowledge it. In a choppy sea all ships in the fleet are going to experience a similar motion. The stock market is sometimes plain sailing and sometimes stormy weather; different conditions that effect all at sea.


As for Covid, it's generally assumed (rightly or wrongly) that it has become, and is likely to stay, endemic. Time will tell. As you note if there are wide spread highly infectious mutations then that is likely to boost Pfizer's bottom line some. Though, persuading significantly more people to get vaccinated, boosted, and treated might be a bit of an uphill battle.


Do you know of better alternatives that would be more table-pounding than this, today?

No'

But I could probably come up with five companies that seem as attractive (to me) as Pfizer does. I don't consider PFE a table pounding buy; I can't identify any one company'let alone five'as table pounding buys given the uncertainty that the economy, and the world, face at the moment.

As I wrote previously, 'on a risk reward basis Pfizer, given its current valuation/stock price, seems a fair bet given current conditions.' It is on my watch list.

It may be that I'm a little jaded when it comes to my expectations about Pfizer. I've owned the stock for probably close to 20 years. The returns have been disappointing, but it has been modestly profitable none the less.

Something that strikes me about PFE's earnings history are the 12 years from 2007 to 2019. It took until 2019 for EPS to best their record earnings of 2007. (Value Line data). Regardless, the stock price about doubled, mainly down to P/E expansion during that stretch. Perhaps more because of 'ocean conditions' than company specifics?

If you think that Pfizer is a table pounding buy then back up the truck; you probably have more to gain than lose, given enough time.

kelbon