Morningstar

Pfizer Earnings: Strong Growth for Newer Drugs Counters Covid Declines

We still need to see significant pipeline progress to gain confidence in Pfizer’s goal of high-single-digit top-line growth in 2028-33.

Exterior view of the Pfizer headquarters building.
Kena Betancur/VIEWpress via Getty
Securities in This Article
Pfizer Inc
(PFE)

Key Morningstar Metrics for Pfizer

  • Fair Value Estimate
    : $32.00
  • Morningstar Rating
    : ★★★★
  • Morningstar Economic Moat Rating
    : Narrow
  • Morningstar Uncertainty Rating
    : Medium

What We Thought of Pfizer’s Earnings

Pfizer PFE reported 3% revenue growth in the second quarter and flat adjusted diluted EPS. Management raised the midpoint of revenue guidance for 2026 by $500 million to $61.5 billion and maintained adjusted diluted EPS guidance of $2.80-$3.00. Shares rose 2% intra-day on Aug. 4.

Why it matters: Near-term strength in US sales of cardiovascular drug Eliquis and solid double-digit growth for key newer launches are helping to counter minimal demand for covid vaccines and treatments.

  • Migraine drug Nurtec (18% growth) and oncology drugs Lorbrena (37% growth) and Padcev (23% growth) stood out as growth drivers that also have a long road of growth ahead, in our opinion, with patents running to at least 2033.

The bottom line: We’re maintaining our $32 fair value estimate for narrow-moat Pfizer, as our covid sales and cost of capital adjustments were countered by increased Eliquis and pipeline expectations as well as more cost-cutting. We think shares undervalue Pfizer’s obesity and oncology pipeline opportunities.

  • We’re maintaining our Metsera-related revenue forecast at $5 billion in 2035, with phase 2 data for the amylin therapy expected later this year. We’ve also boosted our explicit assumption for prostate cancer drug mevrometostat (first phase 3 data expected by the end of 2026).
  • Under our updated discount-rate framework, we’ve raised our Pfizer WACC estimate to 7.3% from 7.1%. Our beta of 0.6 reflects our view of both biopharma’s defensive nature and Pfizer’s own fundamentals and market returns.

Long view: We still need to see significant pipeline progress to gain confidence in Pfizer’s goal of high-single-digit top-line growth in 2028-33, as we currently assume low-single-digit growth due to headwinds on cardiovascular drug Vyndamax during this time.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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