Is Pfizer Stock Undervalued?

Core Viewpoint - Pfizer has provided an optimistic outlook for 2025, expecting revenues between $61 billion and $64 billion, and adjusted earnings per share between $2.80 and $3.00, despite recent challenges in revenue and margins [1][2]. Financial Performance - In Q2 2024, Pfizer's sales excluding Covid-19 products have shown double-digit growth, with Vyndaqel sales increasing by 66% year-over-year to $3.9 billion, and Eliquis sales rising by 8% to $5.5 billion [2]. - The company's total revenue for the last twelve months reached $59.4 billion, slightly above the $58.5 billion reported in 2023 [2]. Cost-Cutting Measures - Pfizer is targeting $4 billion in cost savings by the end of the year, which includes significant layoffs and reductions in research and development spending [3]. - The company plans to shift its focus towards biologics drugs, which are expected to enhance revenue and margins due to their higher pricing [3]. Stock Performance and Valuation - Pfizer's stock has experienced volatility, with returns of 67% in 2021, -10% in 2022, and -41% in 2023, contrasting with the more stable performance of the Trefis High Quality Portfolio [4]. - Currently, Pfizer's stock trades at under 9 times the expected earnings of $2.94 per share for 2025, significantly lower than its average P/E ratio of 14 over the past five years, indicating potential undervaluation [5]. - The estimated valuation for Pfizer's stock is around $36 per share, suggesting approximately 40% upside from current levels [5]. Market Context - The uncertain macroeconomic environment, including potential rate cuts and political changes, raises questions about Pfizer's performance over the next 12 months [5].