Pfizer Inc (PFE) 25Q1 Update

Pfizer (PFE) reported 25Q1 revenues of $13.7 billion, down 7.8% from 24Q1 and 6.5% below my estimate.  The shortfalls from the prior year and my estimate were due to much lower than anticipated sales of Paxlovid.  Sales of Pfizer’s two COVID-19 treatments have been volatile and are hard to forecast.  GAAP EPS was $0.52, down from $0.55 in 24Q1, but matched my estimate.  Non-GAAP EPS of $0.92 exceeded last year’s $0.82 and my estimate of $0.75.

Management’s 2025 guidance calls for revenues of $61-$64 billion.  Included in the guidance is a net sales headwind of $1 billion due to the IRA’s Medicare Part D redesign, as lower prices early in the year will be increasingly offset by increasing sales volume in the second half.  Revenue headwinds should be offset partially by higher gross margins and lower operating costs.  A reconfiguration of Pfizer’s global manufacturing footprint should begin delivering savings later in 2025 and mostly in 2026.  Management expects 2025 Non-GAAP Adjusted EPS of $2.80-$3.00, below 2024’s $3.11.

My updated projections anticipate 2025 GAAP EPS $1.95, down from $2.13.  My 2025 Non-GAAP estimate is unchanged at $3.00.  For 2026, my projections are essentially unchanged.  They anticipate revenues of $63.6 billion, up 1.8% from projected 2025 revenues, GAAP EPS of $2.37 and Non-GAAP Adjusted EPS of $3.20. The 6.7% increase in 2026 Adjusted EPS (vs. 2025) is due mostly to expected margin improvement.

Management said that the company is executing with focus and discipline on its strategic priorities:  raising R&D productivity, maximizing the value of key products in its commercial portfolio and improving operating efficiency.  It believes that the strength of its business and its relationships with government leaders worldwide will help it navigate successfully through the current volatile external environment.

Since my last report (3/30), Pfizer’s stock has declined 6.2%, in line with the 6.8% drop in the NYSE ARCA Pharmaceutical Index ($DRG), but behind the S&P 500’s 3.8% advance.  The stock is up off of its April 9 intraday low of $20.52 but it has traded sideways this month.  Since mid-May, it has slightly outperformed both the S&P 500 and the $DRG.  Pharmaceutical stocks have been out of favor, primarily due to concerns about the impact of tariffs, threats to implement international reference pricing and changes at the FDA which could impede the drug approval process.

Despite the recent decline in the share price, I am maintaining my price target of $33.  The price target equals 14.0 times projected 2026 GAAP EPS of $2.37 and 10.2 times 2026 non-GAAP EPS of $3.20.  The non-GAAP multiple of 10.2 is below the peer group average of 11.8.  At the $33 price target, the potential total return is 48%, including the stock’s 7.3% dividend yield.  Consequently, I am maintaining my performance rating of “1” (Buy).

This is a summary of Lark Research’s recent report on Pfizer, Inc. (PFE).  To obtain a copy of the report, please reach out to Steve Percoco using the contact information provided below.

June 20, 2025 (Report published on May 30, 2025.)

Stephen P. Percoco
Lark Research
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