Pfizer Inc. (PFE): A Bull Case Theory

We came across a bullish thesis on Pfizer Inc. on Investing With Purpose’s Substack. In this article, we will summarize the bulls’ thesis on PFE. Pfizer Inc.'s share was trading at $24.15 as of September 18th. PFE’s trailing and forward P/E were 12.78 and 7.74 respectively according to Yahoo Finance.

Pfizer (PFE) has experienced a sharp post-COVID revenue normalization, with sales retreating from a 2022 peak of ~$100 billion to $58 billion in 2023, though forecasts project a rebound to ~$64 billion by 2025 driven by new drug launches in oncology and rare diseases. Despite this revenue pullback, the company maintains robust profitability, with operating margins near 28% and net margins exceeding 35%, underpinned by lean expense management. EPS remains solid at ~$2.20, giving a forward P/E under 12x, well below the industry average.

Pfizer generates over $18 billion in annual free cash flow, funding dividends, share buybacks, and R&D without reliance on capital markets, while its balance sheet remains strong with $60 billion in debt against $80 billion in equity and $15 billion in cash equivalents. The stock offers a dividend yield near 6.7%, historically elevated but supported by consistent cash generation, and the company has not cut dividends since the 1940s. If the yield reverts to its 4% historical average, Pfizer shares could imply a price near $42–$45, highlighting significant upside potential.

Technical indicators support a medium-term bullish thesis, with a higher-low/higher-high structure since May, positive RSI and MACD momentum, and retracement support around $25.10–$25.20 presenting a disciplined entry point. Upside targets of $27.50 and $29 align with Fibonacci extensions, while a stop-loss below $24 protects against downside risk. Overall, Pfizer combines defensive qualities, strong free cash flow, a de-rated valuation, and a rich pipeline of new therapies, creating an attractive opportunity for medium- to long-term investors seeking both income and potential capital appreciation.

Previously we covered a bullish thesis on Pfizer Inc. (PFE) by Akim Guerreiro in September 2024, which highlighted its high dividend yield, strong pipeline, strategic M&A with Seagen, and projected recovery in EBITDA and free cash flow. The stock has depreciated approximately by 17% since coverage due to post-COVID revenue normalization. The thesis still stands as Pfizer’s cash flow, pipeline, and valuation remain attractive. Investing With Purpose shares a similar perspective but emphasizes detailed financials and technical entry points.

Pfizer Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 83 hedge fund portfolios held PFE at the end of the second quarter which was 99 in the previous quarter. While we acknowledge the potential of PFE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.