Each quarter, investment firms managing over $100 million are required to file a form 13F with the Securities and Exchange Commission (SEC). These filings provide valuable insight into which stocks the “smart money” investors on Wall Street are buying and selling.
Last quarter, Ken Griffin’s Citadel and Israel Englander’s Millennium Management both bought Pfizer (NYSE: PFE) stock. Investing in Pfizer might look like a questionable move as shares are down nearly 30% over the last three years and the stock has woefully underperformed the S&P 500 throughout 2024.
While Pfizer’s current picture looks a little cloudy, there are a couple of potential catalysts that could fuel a new wave of growth for the company if well executed. Could Griffin and Englander be onto something here? Let’s dig in and explore what an investment in Pfizer might look like.
Pfizer is one of the most recognized pharmaceutical companies in the world. With such a rich history of developing blockbuster drugs across several pockets of the healthcare landscape, what could possibly be plaguing Pfizer stock right now?
Well, for starters, the company’s primary source of growth in recent years can be traced to the COVID-19 pandemic. Pfizer was a leading force against COVID-19, and the company’s vaccines and other solutions sparked record growth. However, while there is still a need for such medications, demand for Pfizer’s COVID-19 treatments has cratered as peak pandemic days appear to be in the rearview mirror.
Nevertheless, I see two potential areas that could help spark a turnaround for Pfizer.
In late 2023, Pfizer closed on a massive acquisition. The company bought an oncology business called Seagen for the not-so-low price tag of $43 billion. The acquisition helped bolster Pfizer’s clinical pipeline and augmented the company’s oncology-specific treatments.
According to Pfizer’s publications, the company hopes to have at least eight blockbuster oncology medications by 2030 — up from five today. If Pfizer executes on this vision, the company could stand to generate billions of dollars in sales across a host of different medications, helping set it up for sustained and robust growth.
Another lucrative opportunity for Pfizer right now is in the weight loss arena. Glucagon-like peptide-1 (GLP-1) agonists such as Ozempic and Mounjaro are revolutionizing the diabetes and chronic weight management market. While Novo Nordisk and Eli Lilly are the two big forces in the GLP-1 realm right now, there are a number of other pharma companies looking to get involved, including Pfizer.
So here’s the thing: Citadel and Millennium don’t have a crystal ball. While it’s interesting that both funds own Pfizer stock during an otherwise tumultuous time in the company’s history, there’s no guarantee that these investments will prove wise.
I think a few things are influencing the moves of Citadel and Millennium. First, Pfizer is an existing position for both firms. I don’t see the recent purchases as anything more than simply adding to an existing allocation. Moreover, considering Citadel and Millennium own large baskets of stocks across a variety of industry sectors, Pfizer likely represents a hedge against other peers.
It’s important to remember that initiatives involving Seagen will take years to play out. Moreover, there is no guarantee that Pfizer will ever succeed in the weight loss space. However, considering how far Pfizer’s shares have fallen, there’s an argument to be made that investor expectations are so low that something catastrophic would need to occur in order to send the stock spiraling even further.
While a number of questions linger in the background, investing in Pfizer at its depressed valuation could look like a smart move in hindsight as the company executes on new opportunities. To me, buying Pfizer stock right now should be rooted in the company’s turnaround and your conviction that the business can diversify further into oncology as well as potentially getting involved in weight loss.
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Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
Do Billionaires Israel Englander and Ken Griffin Know Something? Each Just Bought This Plagued Value Stock. was originally published by The Motley Fool
Source: finance.yahoo.com