Pfizer Stock Down Almost 11% YTD: Should You Buy the Dip?

Pfizer’s PFE stock has declined 10.7% so far this year compared with a decrease of 7.7% for the industry. The stock has also underperformed the sector and the S&P 500, as seen in the chart below. The stock is also trading below its 50-day and 200-day moving averages.PFE Stock Underperforms Industry, Sector & S&PImage Source: Zacks Investment ResearchPfizer stock is suffering due to several factors, the key being declining sales of its COVID-19 products and U.S. Medicare Part D headwinds in 2025. Pfizer also expects a significant impact from the loss of patent exclusivity in the 2026-2030 period, as several of its key products face patent expirations. Uncertainties around tariffs and a volatile macro environment also remain a headwind.The sky-high tariffs imposed by the United States and retaliatory tariffs by China and some other countries hurt global stock markets. Although the massive tariffs imposed by the United States and China are currently on pause, this is only a temporary suspension. The uncertainty around tariffs and trade production measures remains, which has muted economic growth.Although pharmaceuticals have been exempted from tariffs in the first round, they could be Trump’s target in the next round, considering the President’s goal to shift pharmaceutical production back to the United States, primarily from European and Asian countries.However, despite the headwinds, its key drugs like Vyndaqel, Padcev, Eliquis and new and newly acquired products should continue to drive top-line growth. Its cost cuts and internal restructuring are saving costs.The stock’s price dip has confused investors about whether to buy, sell, or hold the stock. Let’s understand the company’s strengths and weaknesses to better analyze how to play PFE’s stock and ease the confusion.Sales of PFE’s COVID Products DecliningWith 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. In 2025, Pfizer’s revenues from Paxlovid and Comirnaty are expected to be similar to 2024. COVID revenues may decline further in future years, depending on infection rates.PFE’s New Drugs & Seagen Acquisition Drive the Top LineThough COVID revenues are declining, Pfizer’s non-COVID operational revenues improved in 2024, 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). The positive trend continued in the first quarter of 2025. 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.PFE Enjoys a Strong Position in OncologyPfizer is one of the largest and most successful drugmakers in oncology. The addition of Seagen strengthened its position in oncology.Its oncology revenues grew 7% on an operational basis in the first quarter of 2025, driven by drugs like Xtandi, Lorbrena, the Braftovi-Mektovi combination and Padcev. 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.In May, Pfizer inked an exclusive licensing deal with China's 3SBio for the latter’s dual PD-1 and VEGF inhibitor, which will strengthen its oncology pipeline. Summit Therapeutics SMMT is also testing a similar dual PD-1 and VEGF inhibitor, ivonescimab, in partnership with China’s Akeso,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 Other Headwinds in 2025Though 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 takes effect in 2025. Higher-priced drugs, including Vyndaqel, Ibrance, Xtandi and Xeljanz, are expected to be most affected by the IRA.The company has also faced its share of setbacks. 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.Moreover, stocks of vaccine makers like Pfizer have been under pressure with the appointment of Robert F. Kennedy Jr., a well-known vaccine skeptic, as the Secretary of Health and Human Services.PFE’s Rising Estimates & Attractive ValuationFrom 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 7.60 forward earnings, lower than 15.12 for the industry and the stock’s 5-year mean of 10.91. The stock is also much cheaper than other large drugmakers like AbbVie, Novo Nordisk, Lilly, AstraZeneca, J&J and others.PFE Stock ValuationImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for 2025 earnings has risen from $2.98 per share to $3.06 per share, while that for 2026 has gone up from $3.00 to $3.09 per share over the past 60 days.PFE Estimate MovementImage Source: Zacks Investment ResearchConsider Investing in PFE StockPfizer faces its share of challenges, including declining sales of its COVID-19 products, U.S. Medicare Part D headwinds, the upcoming loss of exclusivity (LOE) cliff, 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 Eliquisand new and newly acquired products should continue to drive top-line growth.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 7.4%, which is impressive.Investors may consider buying this Zacks Rank #2 (Buy) stock at the present cheap valuation for long-term gains, keeping track of the company’s newer growth prospects. It will be a great pick for value investors, considering its cheap valuation, as well as for income investors due to its sky-high dividend yield.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Pfizer Inc. (PFE): Free Stock Analysis Report Novo Nordisk A/S (NVO): Free Stock Analysis Report Eli Lilly and Company (LLY): Free Stock Analysis Report Summit Therapeutics PLC (SMMT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks