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There has been a shakeup in markets since Donald Trump’s election, and investors have been positioning their portfolios to bet on names that are expected to benefit from the incoming president’s policies. The pharma and healthcare space, which was already out of favor with investors, has continued to look weak after the president-elect tapped Robert F. Kennedy, Jr. to head the Department of Health and Human Services.
A known vaccine skeptic, Kennedy’s anointment led to a selloff in vaccine makers’ share prices. Global pharma giant Pfizer (PFE), which fell 10% in 2022 and 41% in 2023, ended 2024 down about 2%. Pfizer stock trades in the ballpark of $26 and fell to a multi-year low last year before recovering slightly. In this article, we’ll discuss why Pfizer’s stock is so low and whether it is a buy or sell now as Trump takes office in just a few days.
Why Is Pfizer Stock So Low?
Pfizer’s current stock price is only marginally higher than its 1942 IPO price of $24.75, although investors should note the company has split its stock five times in this roughly 80-year period.
Although the company did create significant wealth for investors in the last century, it hasn’t been a star performer. The stock is up a mere 8.5% over the last 20 years and has underperformed the S&P 500 Index ($SPX) by a wide margin. Worse, it has lost 50% of its market capitalization over the last three years.
One of the key reasons for its dismal price action over the last three years is declining sales in its COVID-19 portfolio. Bumper sales of its COVID-19 vaccine and its Paxlovid medication helped propel PFE stock to record highs. As sales of these two products have fallen off the cliff, so has Pfizer’s stock price.
While Pfizer has a decent pipeline of new products in development, it has yet to come up with something groundbreaking. In December 2023, the company had to halt the development of its twice-daily oral weight loss drug danuglipron after adverse side effects were reported.
Additionally, many investors weren’t keen on Pfizer’s Seagen acquisition which added $31 billion in debt to its balance sheet. While Seagen’s cancer treatments fit well with Pfizer’s oncology portfolio, it’s a long-term story. Moreover, several of Pfizer’s patents are set to expire over the next five years, which could pressure the company’s sales unless it develops new products to fill the gap.
Lastly, having Robert F. Kennedy, Jr. as the HHS secretary is not exactly an ideal scenario for vaccine makers like Pfizer given his public views on vaccines. However, Pfizer CEO Albert Bourla is not losing sleep over Trump’s nominee for the key position. Bourla, who spoke with Kennedy Jr. emphasized “the opportunities outweigh the risks” with the incoming Trump administration.
Pfizer Stock Forecast
Of the 24 analysts covering Pfizer, 11 have a “Strong Buy” rating while 12 rate it as a “Hold” or some equivalent. One analyst rates PFE as a “Strong Sell.” PFE’s mean target price of $31.33 is 19.5% higher than the Jan. 15 closing price, while its Street-high target price of $45 is 71.6% higher.
UBS has turned bearish on pharma names ahead of Trump’s inauguration. In a recent note, the firm’s analysts, led by Trung Huynh, said, “We believe President-elect Trump will be capable of enacting significant change, and the unpredictability is expected to cast a shadow over the space.”
Specifically, the brokerage maintained Pfizer as a “Neutral” but slashed its price target by $2 to $29. “We need to see continued successful execution to be more constructive on the name, nevertheless we are encouraged by recent progress on management’s key priorities,” said the UBS note. Analysts termed 2025 a “transition year” for the company.
Should You Buy PFE Stock?
While PFE has been a long-term laggard, I won’t give up on the stock for three main reasons. Firstly, the company is expanding its portfolio of anti-cancer drugs, with Seagen being a key part of that strategy. Management expects Seagen to add $10 billion in “risk-adjusted” sales by the end of this decade.
Secondly, PFE trades at less than 10x its expected earnings over the next 12 months, and while analysts don’t expect its earnings to grow this year, the multiples still look low. Finally, with a dividend yield of over 6.5%, Pfizer looks like a good income play for investors seeking high-yielding and relatively safe dividend stocks.
