1 COVID-19 Stock That's Still a Buy and 1 That's Not
While the pandemic appears to be behind us, COVID-19 cases continue to get registered to date. Moreover, China's zero-Covid policy is now being relaxed, and cases are expected to surge in the near future, which might impact the global scenario.
Moreover, the Biden administration plans to initiate another $10 billion in funding for addressing covid. According to a panel source, "While COVID-19 is no longer the disruptive force it once was, we face new subvariants in the U.S. and around the world that have the potential to cause a surge of infections, hospitalizations, and deaths."
Among the COVID-19 beneficiaries, Pfizer Inc. (PFE) is still worth buying, considering its solid growth prospects. However, Teladoc Health, Inc. (TDOC) might be best avoided considering its weak fundamentals.
Stock to Buy:
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas.
On December 1, 2022, PFE and Roivant Sciences Ltd. (ROIV) announced the formation of a new Vant to co-develop and commercialize RVT-3101. This fully human monoclonal antibody is slated to be the first to introduce biomarker-selected precision medicine against inflammatory bowel disease.
PFE's breakthrough medicinal discoveries are expected to fortify the company's portfolio.
Also, on October 12, 2022, PFE and BioNTech SE's (BNTX) 10-µg booster dose of Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine for children received Food and Drug Administration Emergency Use Authorization. This has been a significant boost for PFE's covid portfolio.
PFE has paid dividends for 33 consecutive years. Its dividend payouts have increased at a 5.7% CAGR over the past five years. Its current dividend yield is 3.22%, and its four-year average yield is 3.63%.
PFE's U.S. revenues came in at $13.85 billion for the third quarter that ended October 2, 2022, up 97.3% year-over-year. Its non-GAAP net income came in at $10.17 billion, up 39.7% year-over-year, while its non-GAAP EPS came in at $1.78, up 40.2% year-over-year.
PFE's revenue is expected to increase 23.3% year-over-year to $100.26 billion in 2022. Its EPS is expected to increase 46.4% year-over-year to $6.47 for the same period. Over the past month, the stock has gained 5.3% to close the last trading session at $49.71.
PFE's POWR Ratings reflect its promising outlook. It has an overall A rating representing a Strong Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE has an A grade for Value and a B for Growth, Sentiment, and Quality. It is ranked #2 out of 162 stocks in the Medical – Pharmaceuticals industry. Click here to see the additional POWR Ratings for PFE (Momentum and Stability).
Stock to Avoid:
Teladoc Health, Inc. (TDOC)
TDOC provides virtual healthcare services in the United States and internationally. The company offers a portfolio of services and solutions covering non-urgent, episodic, chronic, and complicated medical conditions.
TDOC's forward EV/EBITDA of 21.04x is 54.9% higher than the industry average of 13.58x. Its forward Price/Cash Flow of 20.31x is 17.1% higher than the industry average of 17.35x.
TDOC's trailing-12-month ROCE and ROTA of negative 89.48% and 121.67% are lower than the industry averages of negative 39.56% and 31.20%.
TDOC's revenue came in at $611.40 million for the third quarter that ended September 30, 2022, up 17.2% year-over-year. However, its total expenses came in at $683.13 million, up 17.3% year-over-year. Also, its adjusted EBITDA came in at $51.21 million, down 24% year-over-year.
Street expects TDOC's EPS to decrease 22.4% per annum for the next five years. Its EPS is expected to remain negative in 2022 and 2023. The stock has lost 71.6% year-to-date to close the last trading session at $26.04.
TDOC's overall F rating equates to a Strong Sell in our POWR Ratings system.
It has a D grade for Growth, Momentum, Stability, Sentiment, and Quality. It is ranked #77 out of 79 stocks in the D-rated Medical – Services industry. Click here to check additional ratings for TDOC (Value).
PFE shares were trading at $50.51 per share on Wednesday afternoon, up $0.80 (+1.61%). Year-to-date, PFE has declined -11.68%, versus a -16.09% rise in the benchmark S&P 500 index during the same period.