PFE offers growth potential, dividend giant modestly undervalued.

Pfizer remains a solid investment with modest growth upside, while maintaining a monster 6.9% dividend yield. The company has a diverse portfolio of drugs that are protected by a swath of patents that give the company moats from intangible assets, economies of scale, and switching costs.

PFE trades at a 19x P/E ratio, lower than its recent historical average, and has an average target price of $28.75, implying a 15.42% upside. We believe the company has core structural advantages and robust financial health that are overlooked by investors as they focus on near-term headwinds that do not impact the intrinsic value of the company. The company faces numerous short-term uncertainties. A CFO transition, negative estimate momentum, along with technical bearish signals (something we consider to be purely noise and in no way indicative of the intrinsic value of a company) and COVID revenue volatility are all headwinds the company is navigating through the short term. While we acknowledge the company is managing headwinds, we do not believe these headwinds change our long-term investment thesis, nor meaningfully change the long-term intrinsic value of the company.

Pfizer’s robust balance sheet will allow it to focus on its high growth innovative drug business that give the stock a robust upside, while the company maintains a 6.90% dividend yield as fallback.