Pfizer: Why I’m Staying On The Sidelines

Summary:

• Pfizer’s organic oncology business is starting to see growth acceleration, which is a positive sign that counters my earlier expectation that Seagen would carry Pfizer’s whole oncology business.
• Frequent and material ‘extraordinary’ expenses are weighing down on margins. I expect these impacts to outweigh incremental cost-saving benefits in FY25.
• Pfizer trades at a 21.7% discount to peers on a 1-yr forward P/E basis, which is a point for the bullish arguments.
• The overall bearish trend on PFE vs S&P500 is still intact, although the buyers are resisting the decline for now.
• Trump’s appointment of RFK Jr. as the U.S. Health Secretary poses a key risk as potential vaccine policy changes can impact current and future revenue streams.

Performance Assessment

Pfizer (NYSE:PFE) has underperformed the S&P500 (SPY) (SPX) (IVV) (VOO) since my last ‘Neutral/Hold’ update on the stock:

One can probably argue that this was a missed opportunity for a more accurate bearish outlook.

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