Pfizer (NYSE:PFE) stock is down around 25% from its 52-week high of over $31 to $23 now. Pipeline setbacks, including an experimental treatment for Duchenne muscular dystrophy (DMD) failing in a late-stage trial, and concerns about management’s decisions on R&D spending and acquisitions have weighed on Pfizer’s stock lately.
Despite recent declines, we believe Pfizer stock is a compelling buy right now, with its current price of around $23 likely reflecting existing concerns.
Our optimism stems from a comprehensive analysis comparing Pfizer’s current valuation to its recent operational performance and historical financial health. While our assessment across key metrics like Growth, Profitability, Financial Stability, and Downturn Resilience indicates a weak operating performance and financial condition for the company, these factors appear to be already “priced in” to the stock. We’ll detail these aspects below. However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – Is Merck Stock About To Crash?
How Does Pfizer’s Valuation Look vs. The S&P 500?
Going by what you pay per dollar of sales or profit, PFE stock looks slightly cheap compared to the broader market.
- Pfizer has a price-to-sales (P/S) ratio of 2.1 vs. a figure of 3.0 for the S&P 500
- Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 9.5 compared to 20.5 for S&P 500
- And, it has a price-to-earnings (P/E) ratio of 16.8 vs. the benchmark’s 26.4
How Have Pfizer’s Revenues Grown Over Recent Years?
Pfizer’s Revenues have declined marginally over recent years.
- Pfizer has seen its top line shrink at an average rate of 9.0% over the last 3 years (vs. increase of 5.5% for S&P 500)
- Its revenues have grown 11.7% from $60 Bil to $64 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
- Also, its quarterly revenues decreased 7.8% to $18 Bil in the most recent quarter from $15 Bil a year ago (vs. 4.8% improvement for S&P 500.
How Profitable Is Pfizer?
Pfizer’s profit margins are around the median level for companies in the Trefis coverage universe.
- Pfizer’s Operating Income over the last four quarters was $15 Bil, which represents a moderate Operating Margin of 24.3% (vs. 13.2% for S&P 500)
- Pfizer’s Operating Cash Flow (OCF) over this period was $14 Bil, pointing to a moderate OCF Margin of 22.4% (vs. 14.9% for S&P 500)
- For the last four-quarter period, Pfizer’s Net Income was $7.9 Bil – indicating a moderate Net Income Margin of 12.6% (vs. 11.6% for S&P 500)
Does Pfizer Look Financially Stable?
Pfizer’s balance sheet looks weak.
- Pfizer’s Debt figure was $61 Bil at the end of the most recent quarter, while its market capitalization is $133 Bil (as of 6/2/2025). This implies a poor Debt-to-Equity Ratio of 46.2% (vs. 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
- Cash (including cash equivalents) makes up $17 Bil of the $208 Bil in Total Assets for Pfizer. This yields a moderate Cash-to-Assets Ratio of 8.3% (vs. 13.8% for S&P 500)
How Resilient Is PFE Stock During A Downturn?
PFE stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on PFE stock? Our dashboard – How Low Can Pfizer Stock Go In A Market Crash? – has a detailed analysis of how the stock performed during and after previous market crashes.
Inflation Shock (2022)
- PFE stock fell 57.3% from a high of $61.25 on 16 December 2021 to $26.13 on 14 December 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $31.39 on 30 July 2024 and currently trades at around $23
Covid Pandemic (2020)
- PFE stock fell 30.0% from a high of $40.71 on 23 January 2020 to $28.49 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
- The stock fully recovered to its pre-Crisis peak by 2 December 2020
Global Financial Crisis (2008)
- PFE stock fell 57.9% from a high of $27.68 on 1 June 2007 to $11.66 on 2 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
- The stock fully recovered to its pre-Crisis peak by 29 January 2013
Putting All The Pieces Together: What It Means For PFE Stock
In summary, Pfizer’s performance across the parameters detailed above are as follows:
- Growth: Neutral
- Profitability: Neutral
- Financial Stability: Weak
- Downturn Resilience: Very Weak
- Overall: Weak
Pfizer’s stock has certainly seen better days, largely due to the steep decline in demand for its COVID-19 products. While the Seagen acquisition is starting to contribute positively to sales and earnings, it hasn’t been enough to offset the significant revenue loss from its COVID-19 vaccine and treatment.
However, we believe this downturn is already priced into Pfizer’s stock. The company is currently trading at significantly lower valuation ratios than it has in recent years, which suggests that the market to a large extent has accounted for these challenges.
Looking ahead, there are several promising aspects for Pfizer. The company boasts a robust pipeline, particularly in oncology, with several potential blockbuster drugs like Sasanlimab and Vepdegestrant poised to boost future revenues. Additionally, Vyndaqel has seen impressive market share gains, with its sales surging 2.7 times between 2021 and 2024 to reach $5.4 billion. Other new drugs, such as Padcev and Adcetris, are also performing well.
Considering Pfizer’s current low valuation and these future growth drivers, we think PFE stock is a good buy. That said, investors should always consider the risks; our analysis shows that Pfizer’s stock has historically underperformed the broader markets during times of crisis.
Now, while PFE stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
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