Revenue projections beyond 2016
Year-to-date, Pfizer’s (PFE) stock has already fallen 4.2%. Despite its multiple acquisitions to boost its falling top line, investors are cautious about the company. As we’ve discussed in this series, Pfizer has been struggling to overcome revenue losses after the patent expiries of its key drugs. Over the past five years, Pfizer’s revenue has continuously fallen. Its revenue was $48.9 billion in 2015, compared to $67 billion in 2010.
However, given its key asset additions, Pfizer seems to be out of the woods. Wall Street analysts expect Pfizer to earn $52.9 billion in revenue in 2016, reflecting an 8.3% rise on an annual comparison basis. The company is also expected to generate $55.4 billion in 2017 and $57 billion in 2018. Ibrance, Xeljanz, Eliquis, and the pipeline molecule avelumab should drive Pfizer’s growth in the near term.
Drivers behind estimated top line growth
To accelerate its IH (Innovative Health) business’s growth, Pfizer has made multiple acquisitions over the past year. It added two key assets—Crisaborole from Anacor Pharmaceuticals and Xtandi from Medivation—to fuel this growth. For more information on the potentials of these assets, read What Investors Should Know about the Pfizer-Anacor Deal.
Similarly, with its additions of Hospira’s Sterile Injectables and AstraZeneca’s (AZN) small-molecule anti infective businesses, Pfizer is trying to accelerate its EH (Essential Health) business’s growth. To better understand Pfizer’s actions to boost its EH portfolio, read How Can Pfizer Revive Its Essential Health Business?
Direct investment in equity is highly risky. To reduce your risk, you may want to invest in ETFs such as the iShares U.S. Healthcare ETF (IYH). IYH holds 6.6% of its assets in Pfizer and 10.1% of its assets in Johnson & Johnson (JNJ). It also holds 4.9% in Merck & Co. (MRK).
Let’s have a look at analysts’ recommendations for Pfizer in the next article.