Pfizer Earnings: Seagen Sales Help Offset Lost Covid Sales as Pipeline Strengthens

Key Morningstar Metrics for Pfizer

• Fair Value Estimate: $42.00
• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of Pfizer’s Earnings

We are holding steady to our $42 fair value estimate for Pfizer PFE following its slightly better-than-expected second-quarter results. We continue to view the stock as undervalued, with the market not fully appreciating the firm’s cost-cutting and developing pipeline, which reinforce its wide moat.

Total sales increased by 3% operationally, and we expect slight growth acceleration in 2025 as the firm laps challenging covid declines that have been partly mitigated by acquired Seagen revenue. We expect continued growth from several growth drivers, including rare disease drug Vyndaqel (up 71%, but with less than 50% market penetration), pain drug Nurtec (up 44%, with significant market potential remaining), and bladder cancer drug Padcev (recently launched with leading efficacy data).

We expect steady growth until 2028, when patent losses will likely increase, but pipeline advancements could potentially mitigate pressures. Oral weight loss drug danuglipron is undergoing dose optimization studies and could enter pivotal studies in 2025. Within a projected $100 billion weight loss market, daniglipron’s potential is likely underappreciated. Additionally, Pfizer’s rapid advancement of several cancer drugs into phase 3 development opens the door to new blockbusters, including vepdegestrant (breast), sigvotatug vedotin (lung), atirmociclib (breast), and mevrometostat (prostate).

On the vaccine side, Pfizer expects the data from its covid/flu combination later in the year, which should help support over $5 billion of long-term annual sales of Pfizer’s covid-specific vaccine Comirnaty. Also, Pfizer has moved its next-generation pneumococcal vaccine into phase 2 development, which should help protect the $6 billion in annualized Prevnar sales from increasing competition.

Pfizer is tracking well to deliver $4 billion in savings by the end of 2024, and we expect continued margin improvement into 2025 as the firm cuts previous heavy covid-related investments.