Pfizer’s revenue soared in early pandemic days thanks to its coronavirus products — but demand for them has since slipped.
The company has taken steps to boost growth in the coming years and just this week tackled problems that have weighed on investor appetite for the stock.
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The biggest risks facing pharmaceutical companies in recent times haven’t had to do with clinical trials or winning regulatory approval. Instead, investors have worried about President Donald Trump’s intention to lower drug prices and slap a tariff on pharma imports. These two efforts could weigh significantly on these companies’ earnings — and uncertainty about when and how they would be rolled out prompted investors to think twice about buying shares of drugmakers.
This week, though, one company in particular took a step to remove the uncertainty. Pfizer (NYSE: PFE) became the first drugmaker to strike a deal with Trump on pricing, and in return won exemption from import tariffs for three years. Shares of the pharma giant took off, rising 14% in two trading sessions.
Considering this landmark drug pricing agreement with the president, is Pfizer stock a buy? Let’s find out.
Before diving in, a quick note on the Pfizer story so far. The pharma giant is the maker of the top selling coronavirus vaccine and a handful of other blockbusters across treatment areas. Those products helped the company reach a record of more than $100 billion in revenue back in 2022, but since that time, Pfizer has struggled with declining demand for its coronavirus vaccine and treatment and upcoming patent expiration of key products.
At the same time, though, the company has taken steps to address these challenges, such as launching a cost realignment plan, bringing to market several new drugs, and benefiting from its recent acquisition of oncology biotech, Seagen, to boost its position in cancer treatment.
All of this should help Pfizer gain momentum and potentially enter a new phase of growth within the next few years as cost savings kick in and new products start boosting revenue. Pfizer recently said it expects more than $7 billion in cost savings by 2027, and the company has said non-coronavirus new launches should generate $20 billion in sales in 2030.
But the unknowns of import tariffs ahead and any potential order from the U.S. to slash drug prices represented an ongoing weight on the company and the stock price. Until Pfizer chief Albert Bourla and Trump agreed to a deal a few days ago.
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