Pfizer Inc. (PFE), striving to set the standard for quality, safety, and value in the discovery, development, and manufacture of biopharmaceutical products, reported solid second-quarter 2024 earnings and raised guidance for the full year. In the second quarter of 2024, the company’s revenues increased 2.1% year-over-year to $13.28 billion. This was PFE’s first quarter of top-line growth after reporting declines over the past five quarters.
Despite a modest year-over-year growth, Pfizer’s overall revenue growth has been sluggish, particularly in the post-pandemic period, as the pharma company lost the revenue boost from its COVID-19 vaccine. During the first six months of 2024, PFE’s revenues came in at $28.16 billion, down 11% year-over-year.
Furthermore, the company reported adjusted income and EPS of $3.40 billion and $0.60 for the second quarter, down 11.4% and 10.4% from the previous year’s quarter. While Pfizer’s adjusted EPS declined year-over-year, it surpassed analysts’ expectations of $0.46.
Dr. Albert Bourla, Chairman and CEO of Pfizer, said, “We are driving progress toward our 2024 strategic priorities through solid execution across the company. I am pleased with the strong performance of our product portfolio in the second quarter led by several of our acquired products, key in-line brands and recent commercial launches. Notably, we achieved exceptional growth in our Oncology portfolio, with strong revenue contribution from our legacy-Seagen products.”
“Overall, I am encouraged by our performance in the first half of 2024 and we remain focused on making a difference in the lives of patients as we continue to advance and strengthen our company,” Bourla added.
Following an improved second-quarter performance that exceeded past expectations, PFE raised its full-year guidance. The company increased its revenue guidance by $1 billion at the midpoint to a range of $59.5 to $62.5 billion. Its adjusted EPS is expected to be $2.45 to $2.65, up from the prior guidance of $2.15 to $2.35.
Pfizer’s Strength: A High Dividend Yield
Pfizer has raised dividends for 13 consecutive years. PFE pays an annual dividend of $0.42, which translates to a yield of 5.8%. The dividend yield of 5.80% is well above the average yield in the pharmaceutical sector. The company has demonstrated a long-standing commitment to returning capital to shareholders, having paid nearly $5 billion in dividends in the most recent quarter alone.
However, PFE’s dividend yield, while appealing, may not fully compensate for the company’s slower revenue growth trajectory. Since the pharmaceutical giant grapples with falling COVID-19 vaccine sales and patent cliffs on blockbuster drugs, future revenue growth may remain muted. This leaves Pfizer in a position where its high dividend yield could mask underlying financial challenges.
While Pfizer offers an attractive dividend yield, growth investors may find more attractive opportunities in faster-growing pharmaceutical companies like AbbVie Inc. (ABBV) and Eli Lilly and Company (LLY).
AbbVie: A Balance of Growth and Income
ABBV presents a compelling case for investors seeking both income and growth. The company boasts a strong product pipeline, particularly in immunology, oncology, neuroscience, and eye care, which positions it for sustained revenue growth. Moreover, AbbVie recently showcased the advancement of the solid tumor pipeline at ESMO 2024 with new data from its innovative antibody-drug conjugate (ADC) platform.
Further, in August 2024, the company completed the acquisition of Cerevel Therapeutics (CERE). This strategic acquisition strengthens its foundation in neuroscience and positions it to deliver sustainable long-term performance into the next decade and beyond.
For the second quarter that ended June 30, 2024, ABBV’s worldwide net revenues increased 4.3% year-over-year to $14.46 billion. Global net revenues from the oncology portfolio rose 10.5% year-over-year, and global net revenues from the neuroscience portfolio grew 14.7%.
“Our business continues to perform exceptionally well, with second quarter results meaningfully ahead of our expectations,” stated Robert A. Michael, chief executive officer of AbbVie. “Based upon the significant momentum of our ex-Humira growth platform, our continued investments in the business and our pipeline progress, we are very well positioned to deliver our top-tier long-term outlook.”
Following an outstanding second-quarter performance, AbbVie raised the 2024 adjusted EPS guidance range from $10.61-$10.81 to $10.71-$10.91.
In addition to these growth opportunities, AbbVie remains committed to rewarding shareholders. The company has a solid dividend track record, raising dividends for ten consecutive years. The company raised an annual dividend of $6.20, translating to a yield of 3.23% at the prevailing share price, making it an appealing option for investors who want a combination of dividend income and growth potential. Its balance of innovation and shareholder returns makes it an attractive long-term investment.
Should You Rebalance Your Portfolio?
For investors focused on maximizing long-term returns, it may be the right time to rebalance their portfolios. PFE’s high dividend yield remains attractive, but those seeking higher growth should consider trimming their positions and reallocating toward faster-growing pharmaceutical companies like ABBV or LLY.
