Pfizer $PFE just announced a vaccine and it has already got a 100 million doses order from the US Government for $1.95 billion, with the option of buying another 500 million. The EU ordered 300 million doses and in total so far, around 600 million doses have been ordered. This was not something Wall Street was expecting as the bet was mostly on Moderna $MRNA , Johnson & Johnson $JNJ and Astra-Zeneca . Pfizer tells us that they can produce up to 1.3 billion doses in 2021. This is the bull case. In the bear case, it is the current 600 million doses order they already have. Even with the bear case, there is the possibility that the FCF of Pfizer will increase by 20% next year. Pfizer, however, is a much bigger company and is the second largest pharmaceutical company in America after Johnson & Johnson.
Pfizer is undergoing a spinoff with Upjohn, which will own all their generic and unpatented drugs. This is going to improve their margins in the long-term.
The reason why this spinoff is so important to Pfizer is because the company is not growing anymore. Revenues have been declining while profits have been more or less the same in the last 10 years. EPS increased since they bought back 30% of shares outstanding. Last year, they paid $8 billion in dividends, $8 billion in share buybacks on only $10 billion in FCF. And they have to repay $22 billion of their debt. They still have a massive debt of $61 billion. Important to note that the company was recently dropped from the Dow Jones Industrial Average $DJ30 .
I have to pass on this investment. Pfizer CEO Albert Bourla sold most of his shares recently. This is not something good.
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