Is It Too Late to Buy Pfizer Stock?

Are Pfizer‘s (PFE -0.04%) best days behind it? If the stock’s critics are to be believed, the answer is an emphatic “yes, obviously,” with issues like its recent stint of unprofitability and a beaten-down top line being the primary pieces of supporting evidence.

But even the best companies can sometimes have a few quarters of difficulty, and investors should hesitate before counting this stock out. Let’s analyze the arguments on each side and reach an actionable conclusion.

The argument for it being too late

What does it even mean for someone to say that it’s too late to buy shares of one of the world’s biggest and best-known pharmaceutical stocks? Perhaps Pfizer’s detractors believe that the majority of the growth opportunity is in the past. One quick look at this chart indicates that they might be on to something:

PFE revenue (TTM) data by YCharts; TTM = trailing 12 months.

As you can see, its trailing-12-month revenue and earnings are currently trending downward, with either anemic growth or a decline over the last 10 years. And its net losses over that period total $309 million, which also suggests that its dividend could be at risk of a cut.

When paired with the company’s new plan to cut $4 billion in costs before the end of this year, it’s easy to paint a picture that shows Pfizer as being in a state of decline. To make matters worse, the forces behind this purported decline do not imply room for recovery.

As shown on the chart, Pfizer’s performance during the early phase of the pandemic was very strong as a result of its rapid development of its Comirnaty vaccine against COVID, as well as its antiviral called Paxlovid. In the first quarter of 2023, global sales of Comirnaty brought in revenue of more than $3 billion. But in the first quarter of 2024, Comirnaty sales were just $354 million.

That revenue won’t be coming back. And there probably won’t be any single opportunity of a similar size anytime soon, if there ever is. Even when examining the company’s top line without the detrimental impact of its collapsing COVID segment, it still grew by only 11% in the first quarter — hardly a snappy enough pace to believe that better times are ahead for shareholders.

So, at least for investors who are still looking for a repeat of the returns offered by Pfizer stock early in the pandemic, it looks like it is indeed too late to buy its shares.

The critics might not have the full picture

The above arguments for why it’s too late might seem convincing, and they’re not without some pretty substantial kernels of truth. But they’re actually misguided for several reasons.

First and foremost, Pfizer has been around for a long time. Its gains and setbacks over the last four years or so will soon enough be overshadowed by the drivers of its long-term value, which is to say its research and development (R&D) capabilities as well as its merger and acquisition (M&A) activities. On those fronts, management has big plans.

Its R&D expenditures have totaled $10.6 billion over the last 12 months, and its pipeline has 37 programs in late-stage clinical trials and another 28 programs in mid-stage trials.​​ Since recently buying Seagen, a cancer drug developer, and launching its new long-term strategy to bolster its oncology pipeline dramatically over the coming years, it now plans to be treating at least 4.6 million cancer patients per year by 2030, twice as many as it did in 2023.

By 2030, it also expects to have a minimum of eight blockbuster cancer drugs yielding upward of $1 billion in annual revenue. Some of those will be the result of more acquisitions, but many will be produced by its own R&D efforts. All told, management is anticipating roughly an additional $45 billion in annual revenue within the next six years. For reference, its trailing-12-month revenue was $54.8 billion.

Therefore, if these plans are brought to fruition — and so far, it looks like they’re on track — the Pfizer of 2030 will have a top line of nearly $100 billion. Investors who bought shares now, when the stock is out of favor and the strategic plan hasn’t even started to deliver its objectives, will likely see a significant run-up in exchange for taking the risk.

Sure, it’s possible that one of the world’s most consistently profitable pharmaceutical businesses could go into a tailspin and fail at its ambitious goals. But that would be a surprising outcome. And with that perspective in hand, it’s definitely not too late to buy Pfizer stock if you’re patient.