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Pfizer (PFE) announced strong second-quarter 2025 results on Aug. 5, beating estimates for both earnings and sales. Adjusted EPS of 78 cents rose 30% year over year while revenues of $14.7 billion were up 10%. Revenues from the Vyndaqel family, Padcev, Lorbrena, Paxlovid and Comirnaty vaccine rose in the quarter. Sales of some other key products like Prevnar, Xeljanz, and Eliquis also improved from first-quarter levels, partially offset by a decline in Ibrance. However, higher manufacturer discounts resulting from the Medicare Part D redesign under the Inflation Reduction Act (IRA) hurt U.S. revenues by $875 million.
Pfizer reaffirmed its outlook for revenues for 2025. However, the company raised its adjusted EPS guidance range, despite including a one-time charge related to the 3SBIO transaction.
However, a single quarter’s results are not so important for long-term investors, and the focus should rather be on the company’s strong fundamentals. Let’s understand the company’s strengths and weaknesses to better analyze how to play Pfizer stock in the post-earnings scenario.
Pfizer is one of the largest and most successful drugmakers in oncology. The addition of Seagen strengthened its position in oncology.
Its oncology revenues are rising, driven by drugs like Xtandi, Lorbrena, the Braftovi-Mektovi combination and Padcev. Its oncology revenues grew 9% in the first half of 2025
Pfizer has ventured into the oncology biosimilars space and markets six biosimilars for cancer. Pfizer also advanced its oncology clinical pipeline with several candidates entering late-stage development, like sasanlimab, vepdegestrant and sigvotatug vedotin. By 2030, it expects to have eight or more blockbuster oncology medicines in its portfolio.
In July, it closed a global ex-China in-licensing agreement with China's 3SBio for exclusive rights to the latter’s dual PD-1 and VEGF inhibitor, which will strengthen its oncology pipeline.
Pfizer is also working on expanding the labels of approved products (oncology as well as non-oncology) like Padcev, Adcetris, Litfulo, Nurtec, Velsipity and Elrexfio, among others.
Pfizer’s non-COVID operational revenues are improving, driven by its key in-line products like Vyndaqel, Padcev and Eliquis, new launches and newly acquired products like Nurtec and those from Seagen (December 2023). Pfizer's recently launched and acquired products delivered $4.7 billion in revenues in the first half of 2025, rising approximately 15% operationally versus last year.
Continued growth of Pfizer’s diversified portfolio of drugs, particularly oncology, should support top-line growth in 2025.
Pfizer’s new products/late-stage pipeline candidates and newly acquired products, including those acquired from Seagen, position it strongly for operational growth in 2025 and beyond. Pfizer expects the 2025 to 2030 revenue CAGR to be approximately 6%.
Pfizer expects the acquisition of Seagen to contribute more than $10 billion in 2030 risk-adjusted revenues with potential significant growth beyond 2030.
With the end of the pandemic, sales of Pfizer’s COVID products, Comirnaty and Paxlovid, came down to around $11 billion in 2024 from $56.7 billion in 2022. Though sales of Paxlovid and Comirnaty have stabilized in 2025 after declining significantly in the past two years, their sales are usually weighted toward the second half of the year and are difficult to estimate as they depend on infection rates. There is an element of uncertainty related to COVID sales and they may decline further in future years.
Though Pfizer expects a moderate negative impact on revenues from the loss of exclusivity in 2025, the impact is expected to be significant in the 2026-2030 period as several of its key products, including Eliquis, Vyndaqel, Ibrance, Xeljanz and Xtandi, will face patent expirations.
Pfizer expects an unfavorable impact of approximately $1 billion from the Medicare Part D redesign under the IRA, which took effect in the first quarter of 2025. Higher-priced drugs, including Vyndaqel, Ibrance, Xtandi and Xeljanz, are expected to be most affected by the IRA.
In April, Pfizer said it is discontinuing the development of its GLP-1R agonist, danuglipron, which was developed as a weight loss pill. Pfizer took the decision after one of the participants in the dose-optimization studies developed a potentially drug-induced liver injury, which resolved after danuglipron was discontinued. Novo Nordisk NVO and Eli Lilly LLY currently dominate the obesity market with their GLP-1 injections.
The uncertainty around tariffs and trade production measures has muted economic growth. President Trump has once again threatened to impose heavy tariffs, as high as 250%, on pharmaceutical imports. Trump’s repeated threats to impose tariffs on pharmaceutical imports are aimed at pushing American pharma companies to shift pharmaceutical production back to the United States, primarily from European and Asian countries. Trump has said that drugmakers have about one to one and a half years to bring production back to the United States before the new tariffs are imposed.
On the Q2 conference call, Pfizer’s chief financial officer (CFO), David Denton, said that the company is prepared to mitigate the impact of tariffs in the short term while plans are being devised to help mitigate the potential long-term impact of tariffs on its business operations.
President Trump is also trying to implement the Most Favored Nation (MFN) pricing policy. The goal of this proposed policy is to ensure that U.S. consumers pay the same price for some prescription drugs as the nation that pays the lowest price for that drug. Such a policy, if implemented, can hurt prices and reimbursement of some of the company’s drugs.
Pfizer’s stock has declined 2.4% so far this year compared with a decrease of 6.8% for the industry.
From a valuation standpoint, Pfizer appears attractive relative to the industry and is trading below its 5-year mean. Going by the price/earnings ratio, the company’s shares currently trade at 7.93 forward earnings, lower than 13.71 for the industry and the stock’s 5-year mean of 10.80. The stock is also much cheaper than other large drugmakers like AbbVie, Novo Nordisk, Lilly, AstraZeneca, J&J and others.
The Zacks Consensus Estimate for earnings has risen from $3.07 per share to $3.11 per share for 2025, while that for 2026 has increased from $3.06 per share to $3.09 per share over the past seven days.
Pfizer faces its share of challenges, including COVID-19 product-related uncertainty, U.S. Medicare Part D headwinds, the upcoming loss of exclusivity (LOE) cliff in the 2026-2030 period, uncertainties around tariffs and a volatile macro environment. However, with COVID-related uncertainties diminishing, its revenue volatility is declining. Pfizer’s key drugs like Vyndaqel, Padcev and its recently launched and acquired products should help the company largely offset its LOEs over the next several years.
Pfizer expects cost cuts and internal restructuring to deliver savings of $7.7 billion by the end of 2027. Pfizer’s significant cost reduction and efforts to improve R&D productivity measures should drive profit growth. Though Pfizer does not expect strong top-line growth over the next three years due to the LOEs, it expects EPS growth.
Pfizer’s dividend yield stands at around 7%, which is impressive. In the first half of 2025, Pfizer returned $4.9 billion to shareholders via our quarterly dividend.
Investors should continue to retain this Zacks Rank #3 (Hold) stock in their portfolio as it appears to have significant upside potential. It will be a great pick for value investors, considering its cheap valuation, and for income investors due to its high dividend yield.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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