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Pfizer (PFE) is a pharmaceutical and biotechnology company valued at $145 billion by market capitalization. While the company is more recently renowned for its COVID-19 vaccine, it also develops medicines and vaccines for immunology, oncology, cardiology, endocrinology, and neurology.
Despite a positive fourth-quarter report that beat consensus estimates, Pfizer stock is down 3.2% year-to-date, compared to the S&P 500 Index’s ($SPX) gain of 4.2%. Let’s find out if Pfizer stock is a good buy now.
Pfizer Reported a Better-Than-Expected Q4
In the fourth quarter, Pfizer’s total revenue increased 22% year-over-year to $17.8 billion. Adjusted earnings per share (EPS) were $0.63, up from $0.10 in the same quarter last year. This growth was fueled by a one-time, non-cash revenue reversal associated with its COVID-19 antiviral, Paxlovid, as well as contributions from the Seagen portfolio and the Vyndaqel family. Its antiviral treatment, Paxlovid, contributed $727 million, up from the year-ago quarter, while its COVID-19 vaccine, Comirnaty, generated $3.4 billion in sales during the quarter, down 38%.
For the full year, revenue grew 7% to $63.6 billion with an adjusted EPS increase of 69% year-over-year.
Aside from its COVID-19 portfolio, Pfizer’s product portfolio is well-diversified, which contributed to the growth in 2024. Notably, Eliquis revenue grew 10% in 2024. Additionally, the Vyndaqel family of treatments also grew 65% combined. Its oncology portfolio, led by Ibrance, generated $4.1 billion in revenue, contributing significantly to the revenue mix for the full year.
Pfizer’s cost-cutting initiatives have begun to yield results. It expects to achieve at least $4 billion in net cost savings by 2025. In the Q4 earnings call, the company stated that it has focused its R&D portfolio on four key therapeutic areas: oncology, vaccines, internal medicine, and immunology and inflammation (I&I). The company’s manufacturing optimization program aims to save $1.5 billion by 2027. It believes that the restructuring efforts will continue to drive long-term growth.
Pfizer expects nine Phase 3 readouts, 13 pivotal programs to begin, and four regulatory approvals by 2025. Management stated, “We remain confident in our ability to return to pre-pandemic operating margins in the coming years.”
Management anticipates revenue between $61 billion and $64 billion for 2025, with earnings falling by 3% to 9%. Meanwhile, analysts predict Pfizer’s earnings will fall 5% in 2025 before rising 3.5% in 2026.
Added Perk: A Dividend Stock
Pfizer is also a dividend stock, with a forward yield of 6.7%, higher than the healthcare sector average of 1.6%. Pfizer paid $9.5 billion in dividends in 2024. For the past 16 years, the company has consistently increased its dividend. Furthermore, its payout ratio of 56.5% appears to be moderate, indicating potential for growth. The company’s balanced capital allocation framework enabled it to repay $7.8 billion in debt, pay dividends, and reinvest $10.8 billion in the business.
What Does Wall Street Say About Pfizer Stock?
Following the Q4 results, Gabelli Funds believes that now that Pfizer’s Covid business has stabilized, it will focus more on cost discipline in 2025 to meet its $4 billion target. Similarly, Leerink Partners analyst David Risinger reiterated his “Hold” rating on the stock, with a $28 price target. Risinger stated that while the company’s financial performance is strong, long-term earnings growth will be determined by the results of 2025 clinical trials. While the company’s business development and debt reduction efforts are yielding results, the analyst recommends a cautious approach.
On Wall Street, overall, Pfizer stock is rated a “Moderate Buy.” Out of the 23 analysts who cover PFE stock, 10 rate it a “Strong Buy,” 12 rate it a “Hold," and one suggests a “Strong Sell.” Its average price target of $30.65 suggests that the stock can increase by 19.5% over current levels. However, its high target price of $36 implies upside potential of 40.4% over the next 12 months.
Pfizer’s fourth-quarter results indicated a company in transition. The company is using artificial intelligence (AI) to transform its marketing and sales. Furthermore, it is balancing declining COVID-19 product revenues with strategic cost-cutting measures and acquisitions and expanding its pipeline for potential future growth.
