pfe stock: Earnings, Guidance, and What to Dump

The Numbers Don't Lie: Is Pfizer a Buy, Hold, or a Sell?

Pfizer's upcoming Q3 earnings report on November 4th is generating buzz, but let's cut through the noise. Analysts are expecting $0.63 EPS on $16.51 billion revenue, a dip from last year's $1.06 and $17.7 billion. But here’s the kicker: Pfizer's got a solid track record of beating earnings, doing so in 15 of the last 16 quarters. So, what's the real story? Are we looking at a potential buying opportunity, or is this a value trap waiting to happen?

Pipeline Dreams and Legal Nightmares

Investors are pinning their hopes on Pfizer's late-stage pipeline. Elrexfio for multiple myeloma and Sigvotatug Vedotin for non-small cell lung cancer. These could be big revenue drivers, if successful. Updates on the C. difficile and Lyme disease vaccine programs (Phase III testing) are also on the radar. But pipelines are pipelines; full of potential, but also risk.

Then there's the Metsera situation. Novo Nordisk (NVO) essentially outbid Pfizer for Metsera (MTSR), leading to a lawsuit. Pfizer claims Novo's offer is "illusory." It's a messy situation, and legal battles rarely provide immediate clarity. It's worth noting (or, rather, I think it's worth noting) that these sorts of legal tangles often distract from core business operations.

Finally, Trump's policies could impact Pfizer's American operations, which account for the majority of sales. This is a vague point, though. Which policies? How will they impact sales? The data is lacking, making it hard to quantify the risk.

Options Traders and Analyst Sentiment

TipRanks' Options tool suggests traders expect a 4.7% price move post-earnings. The at-the-money straddle, based on the $24.5 strike price, shows call options at $0.56 and put options at $0.60. That’s the market hedging its bets.

Wall Street analysts have a "Hold" consensus, with four "Buy," 12 "Hold," and one "Sell" ratings. The average price target is $28.60, implying 15.7% upside. TipRanks’ AI analyst is more optimistic, with an "Outperform" rating and a $28 target. I looked at the analyst breakdown, though, and there’s a pretty wide spread in those price targets. Some are significantly higher, others lower. That suggests a lot of uncertainty, even among the "experts".

Pfizer's stock has taken a beating, dropping 50% over the past three years. A few years ago, it was the darling of the pharmaceutical world, leading the charge in coronavirus vaccines and treatments. 2022 saw record revenue exceeding $100 billion. But as demand for coronavirus products waned and patents on blockbusters like Eliquis and Ibrance neared expiration, revenue took a hit. The most recent full year saw revenue drop to about $63 billion.

Pfizer's trying to turn things around. A cost realignment plan aims for $7 billion in savings by 2027. New drug launches are projected to generate $20 billion in 2030 revenue (for non-coronavirus products launched through the first half of 2024). The Seagen acquisition (completed in 2023) is also expected to bolster Pfizer's oncology business. Two of Seagen’s products, in the most recent quarter, delivered double-digit growth.

Pfizer's also trying to get into the obesity drug market, aiming to acquire Metsera. As mentioned earlier, Novo Nordisk is throwing a wrench in those plans. It's a competitive space, projected to reach nearly $100 billion by the end of the decade.

I've looked at hundreds of these reports, and the projections always seem overly optimistic. It's rare to see a drug company underestimate future revenue.

The company claims its proposal is "illusory," but the Novo Nordisk bid creates uncertainty. The transition to a better cost structure and the growth of newer products will take time. Don't expect overnight miracles.

Is This a Value Trap?

So, is it time to bail on Pfizer? Or is this a long-term hold? The recovery will take time. New drugs and potential new products need years to gain traction. We're in the early stages of Pfizer's new growth story. Potential risks include the Novo Nordisk situation and slower-than-expected revenue growth. But at about 8x forward earnings estimates, Pfizer is reasonably priced. It isn't time to dump your Pfizer stock but instead to hold on as this recovery story plays out. Is It Time to Dump Your Shares of Pfizer?

A Calculated Gamble, Not a Sure Thing

Pfizer is a turnaround story. The potential is there, but it requires patience and a tolerance for risk. The numbers suggest it's not a screaming "buy," but it's also not a "sell" at these levels. It's a calculated gamble, and the odds, while not overwhelming, are in your favor.