What’s Next For Pfizer Stock After A Solid Q2?
Pfizer (NYSE: PFE) recently reported strong second-quarter results, with both revenue and earnings surpassing analyst expectations. The company announced adjusted earnings of $0.78 per share on $14.65 billion in revenue, exceeding the consensus estimates of $0.58 per share and $13.56 billion.
Following the positive report, Pfizer also raised its guidance for the full year. This news comes after a period of underperformance for the stock; PFE has seen a -12% return since the start of the year, while the S&P 500 has risen 8%. Investor sentiment has been weighed down by concerns surrounding the company’s drug pipeline. However, we think PFE stock remains undervalued at its current levels of around $24.
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Pfizer’s revenue increased 10% year-over-year in second-quarter, reaching $14.65 billion. This growth was driven by strong sales across several key products:
- Vyndaqel sales grew 21% year-over-year to $1.6 billion.
- Paxlovid sales saw a significant 71% increase, reaching $427 million.
- Comirnaty, the COVID-19 vaccine, generated $381 million in sales, nearly doubling its revenue from the same quarter last year.
The company’s profitability also saw a notable improvement, with the adjusted net income margin rising to 30.3%, up from 25.6% in the prior-year quarter. This margin expansion, driven by cost-cutting measures, led to a 30% year-over-year increase in the bottom line to $0.78 per share.
Looking ahead, Pfizer maintained its 2025 revenue outlook of $61 billion to $64 billion but raised its adjusted earnings guidance by $0.10 per share to a new range of $2.90 to $3.10. The company’s ongoing focus on profitability is expected to result in $7.2 billion in cost savings by the end of 2027. Also, see – Pfizer’s Operating Income Comparison
Following the solid Q2 results, Pfizer’s stock has seen a positive reaction in after-hours trading. However, over a longer period, the stock’s annual returns have been inconsistent and significantly more volatile than the broader S&P 500. Related – Buy or Sell PFE Stock?
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In light of the current uncertain macroeconomic environment, characterized by tariffs and trade tensions, a key question for investors is whether Pfizer will repeat its underperformance relative to the S&P 500 over the next 12 months, as it did in 2023 and 2024, or if the company is poised for a recovery.
While we are in the process of updating our financial model to reflect the latest results, we believe PFE stock remains attractively valued at its current levels. Trading at approximately $24, the stock has a trailing price-to-earnings (P/E) ratio of 8x (based on midpoint earnings of $3.00 per share), which is significantly lower than its five-year average P/E of 13x.
Although a slight reduction in the valuation multiple may be justified to account for the slower long-term revenue growth trajectory following the decline in COVID-19 product sales, we believe the current valuation gap is still too wide to ignore.
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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