Pfizer stock (NYSE: PFE) recently reported its Q4 results, with revenues and earnings exceeding the street estimates. The company reported revenue of $17.8 billion and adjusted earnings of $0.63 per share, compared to the consensus estimates of $17.4 billion and $0.46, respectively. The company benefited from better than anticipated sales of its Covid-19 products. The company reiterated its outlook for 2025. Separately, after a lowered outlook Should You Pick MRK Stock At $90?
Since the beginning of 2024, PFE stock has underperformed the S&P 500 index, delivering -3% returns compared to the index’s 27% gain. Investor sentiment toward PFE has been negatively impacted by recent corporate decisions, such as the discontinuation of its experimental sickle cell disease treatment. If you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
Pfizer’s revenue of $17.8 billion in Q4 reflected a 22% y-o-y growth, led by a 61% surge in Vyndaqel sales and a 14% rise for Eliquis. Also, Paxlovid, Pfizer’s Covid-19 antiviral pill, generated $727 million in sales during the quarter, marking a significant turnaround from the $3.1 billion revenue loss recorded in the same period last year. Excluding Covid-19 products, the top-line expanded 12%. Pfizer’s adjusted net income margin of 20.2% in Q4’24 was much better than the 4.1% in the prior-year quarter. This led to a 6x y-o-y rise in the bottom line to $0.63 during the quarter.
Looking forward, Pfizer maintained its 2025 outlook of sales to be in the range of $61 billion and $64 billion and adjusted earnings to be in the range of $2.80 and $3.00 per share, versus $63.6 billion top-line and $3.11 bottom line in 2024. The company has taken into account the changes to the Medicare program, resulting in a hit of $1 billion on sales in 2025. Pfizer has been focused on improving its profitability, and it has increased the cost-savings target to $4.5 billion by the end of this year.
Although Pfizer posted an upbeat Q4, its stock hasn’t seen any upside post the results announcement. Even if we look at a slightly longer period, the changes in PFE stock over the recent years have been far from consistent, with annual returns being considerably more volatile than the S&P 500.
In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last four-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.
Given the current uncertain macroeconomic environment around rate cuts and recent changes in the White House, could PFE face a similar situation as it did in 2023 and 2024 and underperform the S&P over the next 12 months — or will it see a recovery? While we will soon update our model for Pfizer to reflect the latest results, we think PFE stock remains attractive at its current levels. At levels of $26, it is trading at 8x trailing earnings of $3.11 per share, much lower than the stock’s average P/E ratio of 13x over the last five years. Although a modest downward adjustment to the valuation multiple may be warranted to reflect the lack of a solid long-term revenue growth trajectory after the decline in sales of Covid-19 products lately, we believe the current gap is too wide.
While PFE stock looks undervalued, it is helpful to see how Pfizer’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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