Pfizer’s PFE stock has risen 5.9% in the past three months. The stock has started to show a consistent increase, with some ups and downs in between, after it took a hammering in the past couple of years due to declining sales of its COVID products with the end of the pandemic.

After witnessing possibly its worst slowdown in 2023/2024, the company seems to be gradually making a comeback and entering a transition phase. Its non-COVID drugs and contributions from new and newly acquired products have started to drive growth.

Let’s understand the company’s strengths and weaknesses to better analyze how to play PFE’s stock in this transition phase.

Sales of PFE’s COVID Products Declining

With the end of the pandemic, sales of Pfizer’s COVID products, Comirnaty and Paxlovid, came down to around $11 billion in 2024 from $56.7 billion in 2022. In 2025, Pfizer’s revenues from Paxlovid and Comirnaty are expected to be similar to 2024, excluding the $1.2 billion in one-time benefits from Paxlovid. COVID revenues may decline further in future years, depending on infection rates.

PFE’s New Drugs & Seagen Acquisition to Drive Growth

Though COVID revenues are declining, Pfizer’s non-COVID operational revenues improved in 2024, driven by its key in-line products like Vyndaqel, Padcev and Eliquis, new launches and newly acquired products like Nurtec and those from Seagen (December 2023). Revenues from Pfizer’s non-COVID products rose 12% operationally in 2024, exceeding the guidance range of 9-11%. Continued growth of Pfizer’s diversified portfolio of drugs, particularly oncology, should support top-line growth 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.

PFE Enjoys a Strong Position in Oncology

Pfizer is one of the largest and most successful drugmakers in oncology. The addition of Seagen strengthened its position in oncology. Seagen generated sales of $3.4 billion in 2024, up 38% on a pro-forma basis.

Oncology sales comprise around 25% of its total revenues. Its oncology revenues grew 26% on an operational basis in 2024, driven by drugs like Xtandi, Lorbrena, the 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 Valuation

Pfizer’s stock has declined 9.8% in the past six months compared with a decrease of 9.4% for the industry.

PFE Stock Underperforms Industry

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From 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 9.0 forward earnings, lower than 17.51 for the industry and the stock’s 5-year mean of 11.11. The stock is also much cheaper than other large drugmakers like AbbVie ABBV, Novo Nordisk NVO and Lilly LLY.

PFE Stock Valuation

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The Zacks Consensus Estimate for 2025 earnings has risen from $2.93 per share to $2.97 per share, while that for 2026 has decreased from $3.04 to $2.99 per share over the past 60 days.

PFE Estimate Movement

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Stay Invested in PFE Stock

Last year was a strong one in terms of performance and execution by Pfizer, even though its stock took a hit in 2023 due to the decline in revenues and profits. It saw improved performance of its new products, gained and maintained market share of some of its core brands and made rapid pipeline progress in 2024.

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, with COVID-related uncertainties diminishing, its revenue volatility is declining. Its non-COVID drugs and contribution from new and newly acquired products should continue to drive top-line growth in 2025. Also, Pfizer expects cost cuts and internal restructuring to deliver savings of at least $6.0 billion. Continued growth in non-COVID sales and significant cost-reduction measures should drive profit growth.

Pfizer returned $9.5 billion directly to shareholders through dividends in 2024. Its dividend yield stands at around 6.4%, which is impressive.

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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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