Pfizer's Stock Is Finally Showing Signs of Life. Could This Be the Start of a Much Bigger Rally?
The stock has outperformed the market this year, and it still looks heavily undervalued.
Pfizer (PFE) has been a stock that the market has largely ignored for several years, despite having strong fundamentals and an attractive valuation. However, it has recently shown signs of life, with an 18% increase this year, making it one of its best years since 2021. This recent surge in value is part of a larger trend, as investors have been shifting their attention away from tech stocks towards healthcare stocks.
The healthcare sector offers stocks with high yields, with Pfizer being one of the best in that regard, boasting a yield of 5.8%, which is more than five times the average of just 1% on the S&P 500. While Pfizer's current price-to-earnings (P/E) multiple is extremely high at 37, on a forward basis, it is much more reasonable at around 10, based on analysts' expectations of how much earnings the company will generate in the coming year.
This lower valuation on a forward basis indicates that Pfizer is significantly undervalued and could potentially soar to a much higher price in the future as the market realizes its true value.
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