Pfizer and UnitedHealth: Bargain Stocks Near 52-Week Lows

Investor Alert: Pfizer and UnitedHealth stocks are now considered excellent bargains as they have reached near 52-week lows. With the current market conditions, these stocks present possible opportunities for growth despite challenges.

Date: 02-03-2025

AI Rating: 6

Overview of the Situation: The report highlights the current stock market scenario where Pfizer and UnitedHealth Group stocks have dropped significantly from their recent peaks. Investors may find these stocks attractive for potential rebound.

Pfizer Analysis: Pfizer's stock has plummeted about 57% from its late 2021 peak, primarily due to faster-than-anticipated declines in COVID-19 product sales and concerns over patent cliffs for key drugs. Despite this, Pfizer reported a 7% increase in total revenue last year, fueled largely by healthy growth in its blood thinner product, Eliquis, which generated $7.4 billion. Investors can consider the 6.6% dividend yield appealing given this backdrop. However, Eliquis faces a significant patent cliff beginning in 2028, which is expected to impact revenue negatively, though the company has numerous products in development to offset this risk. The expected adjusted earnings per share for 2024 is between $2.80 and $3.00, outpacing the annual dividend obligation of $1.72.

UnitedHealth Group Analysis: UnitedHealth Group's stock is down roughly 25% from the previous November due to higher-than-expected healthcare utilization, resulting in a 35% decline in net income to $15.51 per share. While total revenues increased by 6%, this was less than the 9% rise in medical costs leading to margin pressures. The company does maintain flexibility to raise insurance premiums, which may ease some of the financial strain. Notably, UnitedHealth has also significantly increased its dividend payout by 94% over the last five years, though its current yield remains low at 0.4%.

Stocks: PFE UNH