Buy, Sell, Or Hold PFE Stock At $23?
CANADA - 2025/04/03: In this photo illustration, the Pfizer logo is seen displayed on a smartphone ... More screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
Pfizer (NYSE:PFE) stock is down around 25% from its 52-week high of over $31 to $23 now. Pipeline setbacks, including an experimental treatment for Duchenne muscular dystrophy (DMD) failing in a late-stage trial, and concerns about management's decisions on R&D spending and acquisitions have weighed on Pfizer's stock lately.
Despite recent declines, we believe Pfizer stock is a compelling buy right now, with its current price of around $23 likely reflecting existing concerns.
Our optimism stems from a comprehensive analysis comparing Pfizer's current valuation to its recent operational performance and historical financial health. While our assessment across key metrics like Growth, Profitability, Financial Stability, and Downturn Resilience indicates a weak operating performance and financial condition for the company, these factors appear to be already "priced in" to the stock. We'll detail these aspects below. However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative - having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – Is Merck Stock About To Crash?
Going by what you pay per dollar of sales or profit, PFE stock looks slightly cheap compared to the broader market.
Pfizer's Revenues have declined marginally over recent years.
Pfizer's profit margins are around the median level for companies in the Trefis coverage universe.
Pfizer's balance sheet looks weak.
PFE stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on PFE stock? Our dashboard How Low Can Pfizer Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.
In summary, Pfizer's performance across the parameters detailed above are as follows:
Pfizer's stock has certainly seen better days, largely due to the steep decline in demand for its COVID-19 products. While the Seagen acquisition is starting to contribute positively to sales and earnings, it hasn't been enough to offset the significant revenue loss from its COVID-19 vaccine and treatment.
However, we believe this downturn is already priced into Pfizer's stock. The company is currently trading at significantly lower valuation ratios than it has in recent years, which suggests that the market to a large extent has accounted for these challenges.
Looking ahead, there are several promising aspects for Pfizer. The company boasts a robust pipeline, particularly in oncology, with several potential blockbuster drugs like Sasanlimab and Vepdegestrant poised to boost future revenues. Additionally, Vyndaqel has seen impressive market share gains, with its sales surging 2.7 times between 2021 and 2024 to reach $5.4 billion. Other new drugs, such as Padcev and Adcetris, are also performing well.
Considering Pfizer's current low valuation and these future growth drivers, we think PFE stock is a good buy. That said, investors should always consider the risks; our analysis shows that Pfizer's stock has historically underperformed the broader markets during times of crisis.
Now, while PFE stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
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