Pfizer Inc. (NYSE: PFE) Stock: Can New Drug Pipeline Rescue Tumbling Share Price?

TLDR:

Pfizer stock has fallen 16.44% over the past month, down 30% from its one-year high Starboard Value LP acquired a $1 billion stake in October 2024, pushing for management changes Pfizer forecasts 2025 revenues between $61-64 billion with focus shifting from COVID products The company pays a substantial dividend with current yield of 7.83% Despite strong Q4 earnings, the stock continues to struggle, with Q1 earnings expected April 29

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Pfizer Inc. (PFE) shares have taken a beating in recent weeks. The pharmaceutical giant has seen its stock price

Pfizer Inc. (PFE)

drop 16.44% over the past month, significantly worse than the broader market’s decline of 9.44% during the same period. Since reaching its one-year high on July 30, 2024, PFE has plummeted a concerning 30%.

This downward trend continues a longer pattern of underperformance. Over the past five years, PFE stock has fallen nearly 26%. Looking back to its all-time high in December 2021, shares have plunged more than 63%.

The stock’s struggles have persisted despite a strong performance in its most recent earnings report. In Q4 2024, Pfizer beat earnings per share expectations by an impressive 37.20% and exceeded revenue forecasts by 2.89%.

Post-COVID Transition

Pfizer’s CFO Dave Denton believes the company has turned a corner regarding COVID-related uncertainties. “Our revenue volatility is largely in the past as COVID-related uncertainties have diminished,” Denton stated during the Q4 earnings call.

With COVID cases continuing to decrease, Pfizer is now refocusing resources toward non-COVID and oncological drugs. This shift in strategy is expected to “set the stage for ongoing margin expansion,” according to Denton.

The company’s non-COVID drug products showed strong growth in 2024, rising 12% and exceeding guidance of 9% to 11%. Oncology sales, which make up around 25% of the company’s revenues, are expected to grow further with several drugs in late-stage development.

The oncology drug market is projected to experience an 8.1% compound annual growth rate (CAGR) from 2025 to 2030, potentially providing Pfizer with significant growth opportunities.

Pfizer’s co-marketed blood thinner Eliquis, developed with Bristol Myers Squibb, has been a bright spot. The drug generated $1.83 billion in Q4 2024 alone, representing a 14% year-over-year increase and exceeding analyst expectations of $1.67 billion.

Activist Investor Pressure

In October 2024, activist hedge fund Starboard Value LP, led by Jeff Smith, acquired a $1 billion stake in Pfizer and began pushing for strategic changes. The fund expressed concerns that the company was heading in the wrong direction.

According to Starboard, Pfizer has erased more than $20 billion in market value since 2019 despite receiving $40 billion from COVID-19 vaccine sales. The hedge fund has raised concerns about Pfizer’s leadership, suggesting it has moved away from a disciplined cost structure and investment in novel drugs.

Starboard reportedly approached former CEO Ian Read and ex-finance chief Frank D’Amelio to potentially lead a turnaround effort. The activist fund also criticized Pfizer’s acquisition strategy, which involved spending nearly $70 billion on various deals.

Despite these efforts, Starboard has not yet succeeded in making major changes at Pfizer. The fund missed the January 25 deadline to nominate directors to the board but could potentially push for changes through the 2026 director vote.

Starboard Value LP has established a reputation for making things difficult for executives who disagree with its change requests. Jeff Smith has served on more than 17 company boards and chaired four, highlighting his aggressive approach to activist investing.

Future Outlook

Looking ahead, Pfizer forecasts total revenues between $61 billion and $64 billion for fiscal year 2025. The company expects newly acquired drugs to fill the gap left by lagging COVID products such as Paxlovid.

Pfizer is also making moves in the rapidly growing obesity drug market. Despite entering the space later than competitors like Novo Nordisk (maker of Ozempic), Pfizer is advancing the development of its once-daily oral formulation, dangulipron.

The obesity drug industry is forecast to expand at a substantial 22.3% CAGR from 2025 to 2030, potentially providing another avenue for growth.

For income-focused investors, Pfizer’s dividend remains attractive. The company currently offers a yield of 7.83% and returned $9.5 billion directly to shareholders through dividends in 2024.

Analysts maintain a “Moderate Buy” rating on PFE stock with a consensus one-year price target of $30.53, representing 19.07% potential upside from current levels. More optimistic projections from 24/7 Wall Street suggest shares could reach $33.60 by the end of 2025, based on a projected EPS of $2.80 and a forward P/E ratio of 7.53.

Looking further ahead, the same analysis projects PFE to trade at $34.08 by the end of 2030, offering 55.30% potential upside from today’s share price.

Pfizer will announce its Q1 2025 earnings on April 29, which may provide further insight into the company’s progress with its strategic shift away from COVID products.

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