Why Wall Street Gave Up on Pfizer—and Why That May Be a Mistake

Core Viewpoint - Pfizer is currently undervalued in the market, trading at a forward P/E ratio of approximately 8.6x, significantly lower than the pharmaceutical sector average of 15x to 20x, indicating a potential investment opportunity as the market has priced in expectations of permanent earnings decline [1][2][7]. Financial Performance - Pfizer's stock price has reached multi-year lows around $25, making it one of the least favored assets in the S&P 500, despite offering a solid dividend yield of approximately 6.9% [5][11]. - The company has set a revenue floor of approximately $61 billion for 2026, which is seen as a realistic target that alleviates previous uncertainties surrounding its financial performance [20]. Market Position and Strategy - The company has pivoted towards oncology to address the growth gap left by the decline of its COVID-19 business, with a focus on Antibody-Drug Conjugates (ADCs) that target specific cancer cells [12][13]. - Pfizer's acquisition of Seagen has already generated significant revenue, contributing approximately $3.4 billion in 2024 and $2.75 billion in the first three quarters of 2023 [14]. Weight-Loss Drug Market - Pfizer has re-entered the weight-loss market with strategic acquisitions, including the purchase of Metsera for approximately $7 billion, which offers a next-generation injectable drug with a monthly dosing schedule [16][17]. - The market currently assigns zero value to Pfizer's obesity pipeline, creating a potential upside for investors if clinical trials for new weight-loss drugs succeed [19]. Investment Outlook - The current low valuation of Pfizer presents a unique opportunity for value investors, as any positive earnings surprise could lead to a significant stock price increase [7][21]. - With a strong dividend yield and a stabilized balance sheet following the exit of activist investors, Pfizer is positioned as a foundational holding for value-oriented portfolios, with the potential for a turnaround in 2026 [3][22].