Pfizer: A Bargain Opportunity Amidst Revenue Decline

Pfizer could be a compelling investment despite recent struggles. The pharmaceutical giant's long-term potential shines amid declining COVID-related sales and cost-cutting strategies.

Date: 04-03-2025

AI Rating: 5

Revenue Growth
Pfizer's annual sales saw a sharp decline, dropping from above $100 billion in 2022 to more than a 40% decrease in 2023. This poor performance was primarily due to the substantial drop in revenue from its COVID-19 portfolio. In 2024, however, the company generated $5.7 billion in sales from its COVID medicine, Paxlovid, which is a stark contrast to $1.2 billion in 2023. Additionally, Pfizer earned $5.4 billion from its vaccine, Comirnaty, albeit a 52% decline compared to the previous year. Overall, these products together generated $11.1 billion in sales, indicating that while the COVID-related sales are declining, they still contribute significantly to Pfizer's financial results.

Cost-Cutting Measures
To improve its financial health, Pfizer has initiated plans to deliver net cost savings of $4.5 billion by the end of 2025 after realizing $4 billion in savings last year. This effort towards reducing expenses could bolster its profit margins and positively influence its profitability.

Pipeline and Future Growth
Pfizer is not solely reliant on its COVID-related products as it has expanded its product pipeline significantly. Currently, it has 115 candidates in various stages of clinical trials, including more than 20 late-stage studies in oncology, which could lead to substantial revenue gains in the future. This hints at a positive long-term outlook, especially from recent acquisitions like Seagen that can enhance its oncology portfolio.

While the current market performance poses challenges, the combination of cost-cutting measures and a diverse and robust pipeline may eventually lead to better revenue performance over the long term. Therefore, while Pfizer currently represents a riskier investment, the valuation appears attractive, especially considering its low forward P/E ratio of around 9 compared to the healthcare industry's average of 17.7. Investors willing to be patient may find profitability opportunities as the company’s new products gain traction.

Stocks: PFE