Pfizer Inc is Wall Street Wrong to Give Up on This Comeback Story?

This article first appeared on GuruFocus.

Remember when Pfizer was everywhere? From nightly news to every vaccine card in your wallet, it was the face of the pandemic response. But with COVID now in the rearview mirror, the spotlight has moved on and so have most investors. Revenue has cooled, some pipeline bets have fizzled, and Wall Street seems convinced the best is behind it.

But maybe that story’s too simple.

Pfizer may no longer enjoy the spotlight it had during the pandemic, and investor focus has clearly shifted elsewhere maybe too quickly. It may not be a high-flyer anymore, but with steady cash flows, a deep pipeline, and patient capital discipline, Still, there are signs the company is positioning itself for a return to form, driven more by fundamentals than flashy headlines.

Let’s dig into what’s really happening behind the market’s fading interest.

Pfizer’s Q1 2025 results weren’t flashy but that’s not the story here. The company brought in $13.7 billion in revenue, down 8% from the same quarter last year. A big part of that drop came from the expected collapse in Paxlovid sales, which plunged 75% as COVID receded. But even with revenue down, Pfizer grew its adjusted earnings per share by 12%, hitting $0.92. This points to an important takeaway management is keeping costs in check, they’re managing margins and staying financially disciplined.

Pfizer has realized significant savings from its realignment plan targeting over $4.5 billion in net cost cuts by year-end, with an expanded target of $5.7 billion by 2027. SI&A costs dropped 12%, R&D 11%, while still investing $2.2 billion in the pipeline. The company’s operational efficiency and margin discipline allowed it to absorb the revenue hit from declining COVID product sales, softening the COVID decline.

Even with these challenges, Pfizer reaffirmed full-year guidance: revenue between $61 and $64 billion and adjusted EPS between $2.80 and $3.00. Dividends returned $2.4 billion to shareholders in Q1, with no buybacks yet this year. Rather than a downturn, the numbers suggest the business is entering a steadier phase.

Pfizer Inc is Wall Street Wrong to Give Up on This Comeback Story?

Pfizer’s valuation suggests a market that has given up. The stock trades at a forward P/E of 11.3, EV/EBITDA of 9.7, and a price-to-sales ratio of 2.3. Compare that to peers: Johnson & Johnson at 16.6x P/E, AbbVie at 15.9x, Bristol-Myers Squibb at 17.5x, and Novo Nordisk way up at 32.4x. The gap isn’t subtle it’s a full-blown discount.

That disparity becomes even more interesting when you look at business models. Johnson & Johnson is a diversified healthcare giant with consumer, pharma, and medtech segments. Its stability justifies a premium, but Pfizer also brings global scale, a deep product portfolio, and a proven ability to generate strong free cash flow yet trades at a double-digit discount.

AbbVie is still navigating the Humira patent cliff but has managed investor expectations well by pushing Rinvoq and Skyrizi as follow-ups. Pfizer’s post-COVID transition is similar in scope, but the market hasn’t given it the same benefit of the doubt. Bristol-Myers has its challenges with Eliquis and Revlimid but maintains valuation support thanks to immuno-oncology. Again, Pfizer’s oncology pipeline isn’t barren it’s just earlier stage.

Novo Nordisk is in its own valuation league, riding the weight-loss drug wave. Its GLP-1s have massive pricing power and adoption potential. Pfizer doesn’t have a competitive obesity product yet and that absence is reflected in its steep discount. But that also means expectations are extremely low. And for long-term investors, low expectations paired with potential upside is where real opportunity lives.

But with cash flow still healthy and cost savings being reinvested wisely, the valuation case stands: Market expectations appear to be factoring in worst-case outcomes, not even modest success. And that gap between market pricing and business fundamentals is exactly where thesis-driven investors look for value.

Pfizer’s competitors currently have clearer market narratives, but it remains a formidable player due to its broad reach and operational footprint. But its competitors are telling smoother stories. Johnson & Johnson is diversified and drama-free, with a revenue mix that makes it less sensitive to any one pipeline stumble. Its conservative approach earns it consistent multiples, and investors know what they’re getting.

AbbVie’s transition past Humira has impressed. Even though the clock is ticking on its flagship drug, Rinvoq and Skyrizi have stepped up as legitimate growth engines. That narrative clarity from old blockbuster to new ones is helping AbbVie maintain valuation support even amid uncertainty.

Bristol-Myers Squibb continues to navigate IRA headwinds and patent pressures, but its leadership in immuno-oncology, with Opdivo and Yervoy, remains intact. While Pfizer’s oncology effort is still developing, the Seagen acquisition puts it on a longer-term competitive path that may not be obvious in short-term numbers.

Novo Nordisk, of course, is the star. Its dominance in diabetes and obesity with GLP-1s has rewritten expectations for pharmaceutical margins and growth. Pfizer isn’t competing directly in that lane anymore not after the danuglipron setback. But that only emphasizes how much of Novo’s success is priced in, and how little Pfizer needs to achieve to move the needle from its current depressed valuation.

Pfizer’s current challenge may be less about operations and more about the lack of a straightforward story for investors. The market loves simplicity: a clear story with visible growth drivers. Pfizer’s is murky, complex, and in transition. But that also means the upside is underappreciated. If management can tighten messaging and deliver just a few pipeline or M&A wins, the competitive gap may narrow faster than investors expect.

Pfizer Inc is Wall Street Wrong to Give Up on This Comeback Story?

Around two-thirds of Pfizer shares are held by institutions. Vanguard owns roughly 9%, BlackRock around 8%, and State Street close to 5%. These aren’t speculative bets they’re long-term positions, suggesting continued trust in the business.

Insiders have made minimal moves recently, with no major buys or red flag selling. Interestingly, activist investor Starboard Value took a $1 billion stake earlier this year, signaling that even from a value-investor perspective, Pfizer has latent potential that the broader market might be missing.

Pfizer’s dividend yield stands at a robust 7.2%, supported by consistent free cash flow and a conservative payout ratio. While there’s $3.3 billion left in buyback authorization, management has prioritized debt reduction and pipeline reinvestment this year.

The company is allocating capital to long-term bets: $2.2 billion was poured into R&D in Q1. That’s not a company winding down it’s one quietly reloading.

Pfizer Inc is Wall Street Wrong to Give Up on This Comeback Story?

The Inflation Reduction Act could take a $1 billion bite out of 2025 revenue, particularly impacting Eliquis. Patent cliffs are looming for Ibrance, Xeljanz, and Prevnar, threatening several billion in annual sales by 2027.

The obesity pipeline setback (danuglipron) exposed competitive gaps, and other pipeline stumbles remain a risk. Externally, FX swings, litigation (like the Moderna patent suit), and further U.S. pricing reforms could all weigh on performance.

Pfizer’s rebound may hinge on its ability to deliver pipeline wins or buy them. The second oral obesity candidate has a mid-stage readout coming in 2026. Meanwhile, the $43B Seagen acquisition bolsters its oncology future.

AI partnerships with Flagship and Saama are also aimed at modernizing R&D and reducing development risk. Analysts expect smaller biotech M&A to continue. It’s not a moonshot pipeline, but there are multiple ways Pfizer can unlock value.

Pfizer’s not a growth darling anymore and that’s exactly why it might be worth a closer look. While competitors shine with clearer stories, Pfizer trades like it’s out of moves. But beneath the post-COVID hangover and pipeline stumbles lies a disciplined operator with cash flow, a 7% yield, and undervalued optionality. If even part of the pipeline or M&A strategy delivers, today’s skepticism may look like tomorrow’s missed opportunity. This isn’t a hype play it’s a slow rebuild. And for value-driven investors, that might be exactly the point.