Pfizer’s (PFE) Q2 earnings show the company is finally moving past the tough comparisons created by its pandemic-era boom. Pfizer reported superb Q2 figures, with significant year-over-year growth in revenue and EPS while also reaffirming its revenue guidance for the year. The positive earnings news pushed the stock up to as high as $25 per share, albeit only briefly, before the bears regained control.
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At the height of COVID-19, the pharma giant enjoyed a massive surge in vaccine and treatment revenue. But as the pandemic faded and routine COVID immunizations declined, year-over-year revenue took a sharp hit.
Now, with that chapter largely behind it, Pfizer’s top line is regaining momentum, fueled by innovative blockbusters like VYNDAQEL and ELIQUIS. Still, the road ahead isn’t without hazards. Loss of patent exclusivity (LoE) on key drugs and looming regulatory shifts could weigh on future performance. With risk and opportunity so closely intertwined, I’m maintaining a Neutral stance on PFE—despite its latest earnings blowout.
Q2 Financials: Exceeding Expectations with Cost Discipline
Pfizer’s second-quarter revenue climbed 10% year-over-year to $14.7 billion—a remarkable feat for a company of its size, where each percentage point becomes harder to achieve. But revenue growth only matters if profits keep pace. On that front, Pfizer delivered as well, aided by cost discipline: research & development spending fell 9%, while selling, general, and administrative expenses dropped 8%.
The result? Adjusted diluted EPS came in at $0.78, beating expectations by nearly $0.20. That may not sound earth-shattering—until you remember Pfizer has more than 5.6 billion shares outstanding. That kind of beat adds up fast.
Growth Drivers: Vyndaqel, Eliquis, and Oncology Lead the Way
Pfizer’s strong performance is being powered by standout drugs. The VYNDAQEL family—its treatment for transthyretin-mediated amyloidosis cardiomyopathy—jumped 21% year-over-year to $1.615 billion, making it Pfizer’s second-largest revenue source. Its top seller, the blood thinner ELIQUIS, grew 6% to over $2 billion in Q2, fueled by rising global demand in the expanding anticoagulant market.
While blockbuster IBRANCE is slipping in advance of losing its exclusivity in 2027, Pfizer’s Oncology division remains a powerhouse, generating $4.387 billion in Q2—an 11% increase from last year.
Navigating the Storm: Patent Cliffs and Pricing Pressures
That said, Pfizer has several pressing challenges on the horizon. Multiple key products—including ELIQUIS—face looming patent expirations over the next few years, putting an estimated $17 billion in annual revenue at risk. To put that in perspective, that’s more than an entire quarter’s worth of sales.
The Inflation Reduction Act (IRA) Medicare Part D Redesign is also weighing on U.S. revenue. In fact, without the “higher impact discounts” tied to the IRA changes, ELIQUIS’s Q2 growth would have been even stronger. Adding to the pressure, Pfizer must navigate geopolitical headwinds—such as tariffs—and potential pricing impacts from Most-Favored-Nation policies.
Future Growth: Pipeline Catalysts and Strategic Acquisitions
Pfizer isn’t standing still—it’s been navigating the drug lifecycle for decades. With more than 80 programs in its R&D pipeline, including 23 in Phase 3 trials, the company is positioning itself for the next wave of growth. Oncology remains a core focus, bolstered by the $43 billion acquisition of Seagen in 2023, which is projected to generate roughly $20 billion in risk-adjusted revenue by 2030.
One closely watched candidate is SSGJ-707, a bispecific antibody targeting PD-1 and VEGF, currently in development for non-small cell lung cancer (NSCLC) and other indications. While the PD-1/VEGF class is crowded, it carries ambitions of challenging Merck’s (MRK) KEYTRUDA in an NSCLC market expected to surpass $40 billion by 2030.
PFE Could be a Discounted Opportunity
Without a valuation context, the rest is just noise. Pfizer’s P/E ratio of 12.5 sits roughly 49% below the Health Care sector average. Yet the stock has lagged badly, delivering -32% returns over the past decade. Its hefty 6.91% dividend yield may look appealing, but investors should weigh it against the company’s long history of underperformance.
Is PFE a Buy, Sell, or Hold?
On Wall Street, Pfizer carries a Moderate Buy consensus rating based on five Buy, 12 Hold, and zero Sell ratings in the past three months. PFE’s average price target of $28.73 implies ~18% upside potential over the next twelve months.
Earlier this week, Bank of America Securities analyst Tim Anderson reiterated a Hold rating on PFE with a $28 price target. He highlighted that Pfizer’s experimental cancer therapy, SSGJ-707, shows promise but will face intense competition even if it clears clinical trials. While acknowledging the stock’s conservative valuation and appealing dividend yield, Anderson maintains a neutral stance, citing “concerns about long-term growth prospects due to upcoming patent expirations and competitive pressures from other pharmaceutical players.”
Pfizer’s Comeback Faces Tall Hurdles
While Pfizer’s outlook is improving, there are clear reasons its stock still trades at a discount. The looming loss of exclusivity for blockbuster drugs like ELIQUIS will be difficult to offset, and the Seagen portfolio alone won’t come close to replacing the projected $17 billion revenue hit in the near term. Pfizer must not only deliver in the clinic but also compete effectively in the market, all while contending with the ongoing pricing pressure from the Inflation Reduction Act.
Given these headwinds, even with solid cost control and short-term revenue gains, I’m maintaining a Neutral stance on PFE until its long-term growth drivers are firmly in place.