We recently compiled a list of the 13 Best Pharma Dividend Stocks To Buy In 2024. In this article, we are going to take a look at where Pfizer Inc. (NYSE:PFE) stands against the other pharma dividend stocks.
The pharmaceutical industry in 2024 faced a relatively quiet year, with deal volumes similar to 2023 but lower deal values, reflecting a shift toward smaller, more strategic transactions. Despite challenges such as patent expirations and market uncertainty, innovation remains strong, and there is a better investment environment for biotech. Lower interest rates have also eased capital costs, contributing to increased mergers and acquisitions activity. Biotech IPOs and venture capital investments are seeing a slight recovery, though investment is more concentrated in established companies. However, major pharmaceutical companies face a $300 billion growth gap due to patent expirations, making dealmaking crucial for future growth.
Looking ahead to 2025, EY believes that the pharmaceutical sector is expected to see more deal activity, especially if interest rates remain low. There may be a rise in larger acquisitions to address growth gaps, although smaller, strategic deals are likely to persist. Politically, the US policy environment is shifting with potential impacts on business, including lower corporate taxes and deregulation, but also the possibility of higher tariffs and continued drug pricing reforms. Changes in immigration and leadership within health agencies could also affect the pharmaceutical and biotech industries, with new appointees potentially disrupting the regulatory landscape.
As executives prepare for 2025, drug pricing and access remain their top concerns, according to a Deloitte survey. The survey highlighted that primary concerns include competition from generic drugs and biosimilars and the looming patent cliff, with over $300 billion in sales at risk due to expiring patents by 2030. This has executives expecting a surge in mergers and acquisitions in 2025.
Innovation remains at the forefront as companies look to fill gaps left by expiring patents. However, competition in profitable areas like oncology and immunology is fierce, leading to price pressures even before generics or biosimilars hit the market. On the flip side, the success of GLP-1 receptor agonists is sparking renewed interest in general medicines, with companies racing to tap into the $200 billion market. Additionally, about 20% of companies are adjusting their portfolios to focus on high-potential candidates and better meet market demands. Advanced therapies like cell and gene therapies are also gaining attention, with a shift away from more traditional drugs.
In addition to the competitive landscape, life sciences companies are also keeping a close eye on regulatory changes. In the United States, concerns about the Inflation Reduction Act are growing, while in Europe, shifts in clinical trial regulations could add complexity. As a result, life sciences companies are preparing for a year of both innovation-driven growth and regulatory challenges.
Our Methodology
In this article, we reviewed Insider Monkey’s Q3 2024 database to identify pharmaceutical dividend stocks that hedge funds favored the most. The companies listed below are ranked in ascending order based on the number of hedge fund holders in each firm.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)
A medical technician wearing protective gloves and a mask mixing a biopharmaceutical solution.
Pfizer Inc. (NYSE:PFE)
Dividend Yield as of December 28: 6.53%
Number of Hedge Fund Holders: 80
Pfizer Inc. (NYSE:PFE), founded in 1849 and headquartered in New York, develops, manufactures, and markets biopharmaceutical products globally. It offers medicines and vaccines across multiple therapeutic areas, including cardiovascular, women’s health, and infectious diseases, with key brands like Eliquis, Nurtec ODT/Vydura, and the Prevnar family. Pfizer Inc. (NYSE:PFE) is one of the best dividend stocks to consider.
Oncology is achieving significant growth, with a 31% year-over-year increase driven by strong demand for legacy Pfizer Inc. (NYSE:PFE) and Seagen products. Pfizer Inc. (NYSE:PFE) is now the third-largest US oncology biopharma by revenue. XTANDI, a market leader in advanced prostate cancer, grew 28% year-over-year, while TALZENNA saw a 77% increase, supported by positive survival data from the TALAPRO-2 study for metastatic castration-resistant prostate cancer. PADCEV with pembrolizumab has become the leading first-line treatment for advanced bladder cancer, while LORBRENA achieved 31% growth in thoracic cancer.
Pfizer Inc. (NYSE:PFE) reported Q3 revenues of $17.7 billion, a 32% operational increase. COVID-19 products contributed significantly, with PAXLOVID generating $2.7 billion and COMIRNATY adding $1.4 billion. Non-COVID products also saw strong growth, with revenues of $13.6 billion, up 14% year-over-year. Adjusted EPS was $1.06, benefiting from strong revenues, cost efficiency, and a favorable tax rate, while GAAP EPS was $0.78, impacted by a $420 million charge for a facility sale tied to the discontinued DMD program.
Capital allocation focused on deleveraging, dividends, and reinvestment. Pfizer Inc. (NYSE:PFE) returned $7.1 billion to shareholders via dividends, invested $7.8 billion in R&D, and reduced debt by $4.4 billion year-to-date. It also monetized Helion shares, reducing its stake from 23% to 15%, yielding $3.5 billion in proceeds. The company remains committed to its gross leverage target of 3.25x to enhance shareholder value.
Among the hedge funds tracked by Insider Monkey, Pfizer Inc. (NYSE:PFE) was part of 80 public stock portfolios, compared to 84 in the last quarter. Two Sigma Advisors is one of the leading stakeholders of the company, with a position worth nearly $491 million.
Overall PFE ranks 5th on our list of the best pharma dividend stocks to buy in 2024. While we acknowledge the potential of PFE as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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