Pfizer (PFE) has long been one of my favorite pharmaceutical stocks. The last 5 years haven't been the best given an aging portfolio, but performance appears to be improving. What I like most is Pfizer's reliable dividend, which is covered by free cash flow and has room to grow. Pfizer is also reasonably valued based on historical multiples, market comparables, and a discounted cash flow analysis. Given that, I consider now a good time to add such a reliable performer to your portfolio.
Pfizer's Financial Snapshot
Pfizer is still off of its sales peak back in 2011 ($61 billion), but the worst patent cliffs are now behind them. 2016 was the first year Pfizer showed growth since 2011 and 2017 revenues are expected to be flat (range of $52.4 to $53.1 billion). With that being said, I expect performance to continue improving based on an aggressive acquisition strategy. Recent acquisitions include Hospira in 2015 ($17 billion), Medivation in 2016 ($14 billion) and Anacor in 2016 ($5.2 billion). This improves Pfizer's pipeline and will compliment several successful recent launches including Xeljanz (immunology) and Ibrace (breast cancer).
