Pfizer raises 2025 EPS guidance to $2.90–$3.10 while targeting margin expansion through $7.7B cost savings by 2027

Earnings Call Insights: Pfizer (PFE) Q2 2025

Management View

• Albert Bourla, Chairman and CEO, highlighted progress in R&D, expansion of the commercial portfolio, and improved margins, stating the company is “raising our adjusted diluted EPS guidance for full year 2025 and remain committed to our dividend.” Bourla emphasized the company’s ongoing focus on R&D productivity and commercial execution, citing rapid growth for Elrexfio, with promising survival data and label expansion opportunities in the multiple myeloma market. He described new data from the MagnetisMM-6 study and ongoing Phase III trials aimed at expanding the addressable market.

• Bourla also cited the development of Sigvotatug Vedotin (SV) as a potential growth driver in non-small cell lung cancer, referencing favorable early results and a robust Phase III program. He mentioned a strategic in-licensing agreement with 3SBio to develop SSGJ-707, targeting a $55 billion PD-1 immunotherapy market.

• Commercial performance was led by the Vyndaqel family, Eliquis, Nurtec, Padcev, and XTANDI, with Bourla noting Vyndaqel’s “21% year-over-year operational growth” and Padcev’s “38% in the quarter with growing demand.” He reaffirmed the company’s commercial strategy, saying, “The strong performance in the U.S. and the international divisions shows why we remain confident in the commercial strategy we refined more than a year ago.”

• CFO David M. Denton stated, “For the second quarter 2025, we recorded revenues of $14.7 billion, an increase of 10% operationally.” He highlighted adjusted diluted EPS of $0.78, driven by “strong top line performance and our cost management execution.” Denton also identified $4.7 billion in revenue from recently launched and acquired products and announced a new leverage target of 2.7x, down from 3.25x.

Outlook

• Guidance for full year 2025 was reiterated at $61 billion to $64 billion in revenues. Adjusted SI&A expense is expected in the range of $13.1 billion to $14.1 billion and adjusted R&D between $10.4 billion and $11.4 billion. Adjusted diluted EPS guidance was raised to $2.90 to $3.10, incorporating a $0.20 charge related to the 3SBio transaction. Denton explained, “Given our strong performance to date as well as our outlook…we are raising our full year ’25 adjusted diluted earnings per share guidance by $0.10.”

• The company is maintaining its full year revenue outlook, as most COVID revenues are forecasted for Q3 and Q4. Guidance “absorbs the impact of the currently imposed tariffs from China, Canada and Mexico as well as potential price changes this year based on the letter received on July 31 from President Trump.”

Financial Results

• Q2 revenues reached $14.7 billion, a 10% operational increase, with adjusted diluted EPS of $0.78. Adjusted gross margin for the quarter was approximately 76%. Total adjusted operating expenses were $5.8 billion, an 8% decline operationally versus last year. Recently launched and acquired products delivered $4.7 billion in revenue year-to-date, growing 15% operationally.

• The company returned $4.9 billion to shareholders via dividends in the first half of 2025 and invested $4.7 billion in internal R&D. Denton reported operating cash flows of $1.8 billion for the first half, affected by large payments, with an expectation for improved cash flow in the second half.

• Pfizer is on track to deliver at least $4.5 billion in cumulative net cost savings by the end of 2025 and expects approximately $7.7 billion in savings by the end of 2027.

Q&A

• Trung Chuong Huynh, UBS, asked about the impact of MFN and tariffs on revenue and EPS and CDC vaccine recommendations. Bourla responded, “I’m not in a position to provide much clarity…because we are in very active discussions,” but called the discussions “extremely productive.” Denton noted the strength of the business allows the company to absorb potential impacts.

• Christopher Thomas Schott, JPMorgan, inquired about the reduced leverage target and business development capacity. Denton said, “We’ve improved our cash generation capability over the last — a little faster than we anticipated…so we’re now sitting at 2.7x.” On business development, smaller deals are likely, given $13 billion in current capacity.

• Alexandria Janet Hammond, Wolfe Research, asked about expanding the direct-to-consumer program. Bourla confirmed the company is prepared to expand such initiatives, stating, “We think it is a fantastic way to go ahead.”

• Mohit Bansal, Wells Fargo, asked why guidance was not increased further. Denton explained the company is “derisking some of that,” citing potential volatility in COVID performance in the second half.

• Courtney Breen, Bernstein, sought detail on SG&A efficiencies and M&A priorities. Alexandre de Germay and Aamir Malik described international and U.S. cost reductions and targeted investments, highlighting technology adoption and resource reallocation.

Sentiment Analysis

• Analysts displayed a neutral to slightly cautious tone, focusing on the implications of policy changes, guidance methodology, and competitive dynamics. Multiple questions pressed management on guidance conservatism, business development, and exposure to regulatory risk.

• Management’s tone was confident during prepared remarks, emphasizing productivity and execution. During Q&A, responses were more reserved and occasionally defensive, particularly regarding MFN, tariffs, and future guidance, with Bourla noting, “I’m not in a position to provide much clarity…because we are in very active discussions.”

• Compared to the previous quarter, management’s confidence in operating performance and margin expansion increased, but caution heightened around regulatory and policy risks. Analyst sentiment remained probing, with some increased skepticism about external risks.

Quarter-over-Quarter Comparison

• Guidance for full year 2025 revenue remains unchanged at $61 billion to $64 billion, but adjusted EPS guidance was raised from $2.80–$3.00 to $2.90–$3.10. Management emphasized cost savings and margin expansion in both quarters, but became more explicit about the impact of policy risks and mitigation strategies in Q2.

• The commercial strategy remained focused on core brands and international growth. Product performance highlights in Q2 included stronger operational growth numbers for the Vyndaqel family, Padcev, and XTANDI compared to Q1.

• Analysts’ focus shifted more toward regulatory uncertainty and U.S. policy exposure in Q2, while management’s messaging on business development became more cautious and centered on smaller deals.

Risks and Concerns

• Management cited ongoing active discussions with policymakers regarding MFN and tariffs, with Bourla stating, “I understand that many others may have questions about that. And I’m not sure I can give more information than what I just told you.”

• COVID revenue volatility in the second half of 2025 and competitive pressures in key therapeutic areas were highlighted. The company is absorbing the impact of current tariffs and preparing mitigation strategies for policy changes.

• Analyst concerns centered around the sustainability of current growth rates, potential adverse impacts from U.S. health policy, and the durability of margin improvements.

Final Takeaway

Management underscored strong operational execution, significant cost savings, and disciplined capital allocation as drivers of improved financial performance and increased EPS guidance for 2025. While the company remains confident in its commercial and R&D strategy, it is proactively engaging with policymakers on evolving regulatory risks and preparing to absorb potential impacts from tariffs and MFN. The ongoing focus is on margin expansion, productivity gains, and targeted investment in high-value R&D and business development initiatives, positioning Pfizer for long-term growth despite near-term external uncertainties.

Read the full Earnings Call Transcript