Pfizer, the once-dominant pharmaceutical giant, is facing a significant downturn as its stock price tumbles to levels not seen since 1997. On April 8, 2025, shares of Pfizer (NYSE:PFE) fell by 3.5%, closing at $21.84, with a low of $21.44 reached during the trading session. This decline comes after UBS analysts downgraded their earnings forecasts, projecting a first-quarter earnings per share (EPS) of $0.67, which is below the consensus expectation of $0.71. The market capitalization of Pfizer now stands at approximately $125 billion, a stark contrast to its peak valuation of over $60 per share during the COVID-19 pandemic.
UBS analyst Trung Huynh highlighted concerns over Pfizer's COVID-19 drug sales, particularly for the Paxlovid treatment and the Comirnaty vaccine, which are expected to fall short of Wall Street's expectations. Huynh revised the 2025 EPS forecast for Pfizer down from $2.92 to $2.89, indicating a cautious outlook for the company. In his report, he stated, "We maintain a neutral rating on Pfizer and need to see stability in COVID-19 business, continued growth in key assets (such as Nurtec, ADCs, etc.), and execution of the drug pipeline before becoming more optimistic about the company."
Amid these challenges, Pfizer is grappling with a significant debt burden, estimated at approximately $45 billion by the end of 2024. The company has decided against stock repurchases in 2024 and 2025, focusing instead on reducing its debt. This decision has frustrated some investors, particularly as Pfizer's dividend yield has reached a notable 7.9%, the highest among major pharmaceutical stocks and one of the highest in the S&P 500 index.
Investors are now looking towards Pfizer's oral weight loss drug, danuglipron, currently in clinical trials, as a potential lifeline. If successful, danuglipron could provide a much-needed revenue stream for Pfizer, especially as sales from COVID-related products decline. This urgency for new revenue sources is compounded by the company's commitment to maintaining its dividend payments, which have been consistent for 55 consecutive years. Pfizer's Chief Financial Officer, David Denton, has assured investors of the company's dedication to increasing dividends while achieving its deleveraging goals by the end of 2025.
On the same day, Goldman Sachs made notable changes to its ratings across the U.S. biopharma sector, downgrading Pfizer from Buy to Neutral and reducing its price target from $32 to $25. This reflects a broader caution regarding Pfizer’s near-term prospects, particularly as it navigates the fallout from the pandemic.
As if the situation wasn't dire enough, President Donald Trump announced plans for a "major tariff on pharmaceuticals" that could further complicate matters for Pfizer and other companies in the sector. Following this announcement, shares of Pfizer dropped more than 4%, adding to the company's woes. The implications of these tariffs could force Pfizer to adjust its strategies, especially given its significant revenues and imports from the U.S.
Additionally, UBS analyst Colin Bristow recently revised Pfizer's price target down to $24 from $28 while maintaining a neutral rating. Currently trading at $22.38, Pfizer's stock is nearing its 52-week low of $21.75. Bristow's assessment followed a call with Pfizer management, where they discussed the anticipated impact of the Inflation Reduction Act (IRA) on their portfolio, particularly concerning Medicare Part D redesign.
Pfizer indicated that the IRA's effects will vary as drugs progress through different levels of Part D coverage, with higher-priced drugs like Ibrance, Xtandi, Vyndaquel, and Xeljanz expected to reach the catastrophic coverage stage sooner, while lower-priced products such as Abrysvo, Eliquis, Nurtec, and Paxlovid will benefit from being exempt from the coverage gap.
Despite the downward revisions in sales and EPS forecasts, which are 4.8% and 5.6% below consensus estimates, respectively, UBS acknowledges the potential positive impact of upcoming data on danuglipron. If favorable results emerge alongside the first-quarter earnings report, scheduled for April 29, 2025, and if danuglipron advances into a large Phase 3 obesity program with a competitive profile, it could help mitigate the impact of a weaker quarter.
In other recent developments, Institutional Shareholder Services advised Pfizer investors to reject a proposal concerning executive compensation, citing concerns over modifications that would increase the CEO's long-term awards. This recommendation reflects growing scrutiny over executive pay amid the company's financial struggles.
Moreover, a report by Bernstein has identified Pfizer as one of the companies at high risk from potential tariff implications due to its substantial U.S. revenue and imports. As a precautionary measure against possible disruptions in supply, several drugmakers are reportedly expediting shipments of medicines to the United States in anticipation of new tariffs.
In summary, Pfizer is navigating a turbulent landscape characterized by declining stock prices, reduced earnings expectations, and looming tariff threats. While the company remains committed to maintaining its dividend and reducing debt, the path forward is fraught with challenges that will require strategic adjustments and potential innovations in its product offerings.
