Pfizer Rises 5.6% in a Month: How Should You Play the Stock?

Pfizer’s PFE stock has risen 5.6% in the past month. This was due to the company’s encouraging guidance for 2025 issued in mid-December 2025. Pfizer also maintained its previously issued financial guidance for 2024.Pfizer projected total revenues between $61.0 billion and $64.0 billion in 2025. On an operational basis, revenues in 2025 are expected to be approximately flat to up 5% from the midpoint of 2024 guidance, excluding the impact of approximately $1.2 billion of non-recurring revenues for PaxlovidAdjusted earnings are expected in the range of $2.80 to $3.00 per share. This guidance represents an expected operational growth (excluding Fx impact) of 10% to 18% year over year from the midpoint of the 2024 guidance, excluding the impact of certain non-recurring items.The company’s sales and earnings projections for 2025 were within investor expectations. Many analysts were impressed with its earnings growth expectation and believe the guidance is achievable.One might argue that an increase of around 6% in a month is not that significant, but for a company like Pfizer, any uptrend in stock is encouraging. This is because the stock has mostly underperformed the industry in the past couple of years.Let’s understand the company’s strengths and weaknesses to better analyze how to play PFE’s stock following the latest increase.Sales of PFE’s COVID Products DecliningSales of Pfizer’s COVID products, Comirnaty and Paxlovid, are declining due to lower demand following the end of the pandemic. However, sales of both products were significantly more than expected in the third quarter. Pfizer expects Comirnaty and Paxlovid to maintain market share in 2025 with stable pricing due to their commercialization in both the United States and international markets.There is an element of uncertainty associated with sales of COVID-19 products as it depends on infection rates.PFE’s New Drugs & Seagen Acquisition to Drive GrowthThough COVID revenues are declining, Pfizer’s non-COVID operational revenues improved in the first three quarters of 2024, driven by its key in-line products like Vyndaqel and Eliquis, new launches and newly acquired products from Seagen (December 2023). The trend is expected to continue in the fourth quarter and probably in 2025.Pfizer’s new products/late-stage pipeline candidates and newly acquired products, including those acquired from Seagen, position it strongly for operational growth in 2025 and beyond. Pfizer expects 2025 to 2030 revenue CAGR to be approximately 6%.PFE Enjoys a Strong Position in OncologyPfizer is one of the largest and most successful drugmakers in the field of oncology. Its position in oncology was strengthened with the addition of Seagen, which generated sales of $2.3 billion in the first nine months of 2024, up 38% on a proforma basis. Pfizer expects the acquisition of Seagen to contribute more than $10 billion in 2030 risk-adjusted revenues with potential significant growth beyond 2030.Oncology sales comprise more than 26% of Pfizer’s total revenues. Its oncology revenues grew 26% on an operational basis in the first nine months of 2024, driven by drugs like Xtandi, Lorbrena, Braftovi-Mektovi combination and Padcev. Pfizer has ventured into the oncology biosimilars space and markets six biosimilars for cancer. Pfizer also advanced its oncology clinical pipeline in 2024, with several candidates entering late-stage development. By 2030, it expects to have eight or more blockbuster oncology medicines in its portfolio.PFE’s Stock Performance, Rising Estimates & Attractive ValuationPfizer’s stock has declined 8.4% in the past year compared with a decrease of 1.9% for the industry.PFE Stock Underperforms IndustryImage Source: Zacks Investment ResearchFrom a valuation standpoint, Pfizer appears attractive relative to the industry and is trading below its 5-year mean. Going by the price/earnings ratio, the company’s shares currently trade at 9.05 forward earnings, lower than 15.73 for the industry and the stock’s 5-year mean of 11.26. The stock is also much cheaper than other large drugmakers like AbbVie ABBV, Novo Nordisk NVO and Lilly LLY.PFE Stock ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for earnings per share has risen from $2.91 to $2.92 for 2025 over the past 30 days.PFE Estimate MovementImage Source: Zacks Investment ResearchStay Invested in PFE StockAfter a couple of tough years, it seems that Pfizer’s worst slowdown is over now, and the company is gradually making a comeback.Pfizer faces its share of challenges, the key being declining sales of its COVID-19 products. Pfizer also expects a significant impact from the loss of patent exclusivity in the 2026-2030 period, as several of its key products will face patent expirations. The Medicare Part D redesign under the Inflation Reduction Act (IRA) is also expected to hurt sales of Pfizer’s higher-priced drugs like Vyndaqel, Ibrance and Xeljanz in 2025.However, its non-COVID drugs and potential contribution from new and newly acquired products have started to drive growth, with the trend expected to continue.Its dividend yield stands at around 6.3%, which is impressive. Also, Pfizer expects cost cuts and internal restructuring to deliver savings of at least $5.5 billion. Huge profits from its COVID products strengthened its cash position. The funds are being used to make acquisitions, increase dividends, buy back shares and reduce debt.Those who own this Zacks Rank #3 (Hold) stock may stay invested to see how Pfizer’s new growth drivers perform. Investors with a long-term horizon may consider buying Pfizer’s stock at the present cheap valuation. 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