Pfizer (NYSE:PFE) has faced significant challenges in recent years, with the stock losing half its value since late 2021 as COVID-19 vaccine demand waned. The pharmaceutical giant has struggled to develop new blockbuster drugs to compensate for declining vaccine revenues, raising investor concerns.
However, the company has taken strategic steps to enhance profitability and stimulate growth, including the acquisition of Seagen to bolster its product pipeline. These efforts may position Pfizer favorably in the current market environment.
As the Trump administration’s tariff policies create market uncertainty, with the S&P 500 down 6% this year, investors are increasingly seeking safer investments. Our take on market crash risk right now has more details on tariffs and its impact on the broader market. Now, the healthcare sector has demonstrated remarkable resilience, with the S&P Healthcare index posting a 4% gain during the same period.
Pfizer stock appears particularly well-positioned in this climate of volatility. Having already undergone a substantial correction, PFE shares offer potential value. Additionally, the company has historically outperformed during market downturns, making it a potentially attractive option for investors navigating the current economic uncertainty. 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.
We think that PFE stock looks risky – but a good pick to buy at its current price of around $26. We believe there are a couple of concerns with PFE stock, which makes it risky despite its current valuation being moderate.
We arrive at our conclusion by comparing the current valuation of PFE stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of Pfizer along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a moderate operating performance and financial condition, as detailed below.
How does Pfizer’s valuation look vs. the S&P 500?
Going by what you pay per dollar of sales or profit, PFE stock is currently valued in line with the broader market.
• Pfizer has a price-to-sales (P/S) ratio of 2.4 vs. a figure of 3.2 for the S&P 500
• Additionally, the company’s price-to-operating income (P/EBIT) ratio is 10.0 compared to 24.3 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 11.8 vs. the benchmark’s 24.3
How have Pfizer’s revenues grown over recent years?
Pfizer’s Revenues have seen some growth over recent years.
• Pfizer has seen its top line shrink at an average rate of 3.3% over the last 3 years (vs. increase of 6.3% for S&P 500)
• Its revenues have grown 6.8% from $60 Bil to $64 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
• Also, its quarterly revenues grew 21.9% to $18 Bil in the most recent quarter from $15 Bil a year ago (vs. 5.0% improvement for S&P 500)
How profitable is Pfizer?
Pfizer’s profit margins are much higher than most companies in the Trefis coverage universe.
• Pfizer’s Operating Income over the last four quarters was $15 Bil, which represents a high Operating Margin of 23.5% (vs. 13.0% for S&P 500)
• Pfizer’s Operating Cash Flow (OCF) over this period was $13 Bil, pointing to a high OCF-to-Sales Ratio of 20.0% (vs. 15.7% for S&P 500)
Does Pfizer look financially stable?
Pfizer’s balance sheet looks weak.
• Pfizer’s Debt figure was $64 Bil at the end of the most recent quarter, while its market capitalization is $145 Bil (as of 3/13/2025). This implies a poor Debt-to-Equity Ratio of 42.5% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $20 Bil of the $213 Bil in Total Assets for Pfizer. This yields a moderate Cash-to-Assets Ratio of 9.6% (vs. 14.8% for S&P 500)
How resilient is PFE stock during a downturn?
PFE stock has fared better 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 Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• PFE stock fell 26.4% from a high of $56.69 on 11 January 2022 to $41.75 on 10 October 2022, 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 $54.48 on 14 December 2022 and it currently trades at around $26
Covid Pandemic (2020)
• PFE stock fell 21.7% from a high of $36.40 on 4 March 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 14 April 2020
Global Financial Crisis (2008)
• PFE stock fell 54.3% from a high of $25.54 on 10 October 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 15 October 2012
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: Strong
• Profitability: Very Strong
• Financial Stability: Weak
• Downturn Resilience: Good
• Overall: Strong
Although PFE stock presents a degree of risk due to its moderate valuation, our analysis indicates it remains a favorable buy. We estimate Pfizer’s valuation to be around $36 per share, reflecting over 35% upside from its current levels.
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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