Buy This Fastest Growing Multibagger MNC Pharma Stock For A Target Price Of Rs 5372: ICICI Securities

ICICI Securities in its latest report has given buy rating to the multinational pharmaceutical stock Pfizer Ltd for a target price of Rs 5372 apiece. If investors buy the stock now it has the potential to surge to Rs 5372 with a potential gain of 29%.

1. Pfizer Ltd Stock Outlook

The current market price of the stock is Rs 4168 apiece. The 52-week high of the stock is Rs 6164 apiece and 52-week low of the stock is Rs 4056 apiece. The stock has given multibagger returns. In the last 5 years, the stock has given return of 132% and in the last 3 years it has given return of 40%. The stock has fallen 27% in the last 1 year.

2. Pfizer Ltd business review

Revenues declined 20.9% YoY on the high covid-led base of Q1FY22. However, it grew 7.9% sequentially driven by seasonality. Gross margin expanded by 20bps YoY (-190bps QoQ) to 63.7%. EBITDA margin contracted by 570bps YoY, but grew 230bps QoQ aided by strong cost-controls and operating leverage. Pfizer has managed to keep employee expenses in check over the past few quarters and we expect the voluntary retirement scheme (VRS) to further decrease the cost base going forward. However, we expect SG&A expenses to ramp-up in the near-term as the company invests more towards marketing and promotion, which would restrict the EBITDA margin to ~32-33% over the next two years.

3. Pfizer Ltd performance of key products and outlook

As per secondary sales data, Pfizer's sales declined 13.8% YoY. Among top brands, Meronem and Minipress-XL reported double-digit growth of 28.6% and 12.9% respectively, while Dolonex grew 7.9% YoY. Corex DX, Becosules and Gelusil MPS reported double-digit decline of 33.6%, 25,4% and 15.2% respectively. Magnex and Prevenar-13 reported declines of 5.5% and 3.1% respectively. We believe business should continue to grow in the coming months supported by VMN and cardiac portfolios. Revenue growth should generate some operating leverage, but we expect costs to remain elevated restricting EBITDA margin to ~33%. Minimal capex requirement would help generate FCFF of ~Rs15bn over FY23E-FY24E.

4. Pfizer Ltd valuation and key risks

We increase our EPS estimates by 2-3% respectively for FY23E-FY24E to factor-in lower employee expenses on account of VRS. Maintain BUY with a revised target price of Rs5,372/share based on 34x FY24E earnings (earlier: Rs5,224/share on 34xFY24E). Key downside risks: Addition of key drugs in NLEM, product concentration, government intervention, and presence of unlisted promoter company.

5. Pfizer Ltd about

Pfizer Ltd came into in the year 1950 and is a large cap company operating in pharmaceuticals sector.
Pfizer is in the relentless pursuit of breakthroughs that change patients' lives. It innovates every day to make the world a healthier place. It was Charles Pfizer's vision at the beginning and it holds true today. The company has a market capitalization of Rs 19,031.06 crore.

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.