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This Week's Featured Article Why Wall Street Gave Up on Pfizer—and Why That May Be a MistakeBy Jeffrey Neal Johnson. Publication Date: 12/31/2025. 
Quick Look - Pfizer trades at a historic discount compared to its peers while paying a dividend yield that significantly outperforms the broader market average.
- Strategic acquisitions have established a robust pipeline of next-generation cancer treatments, which are driving growth.
- Management has aggressively re-entered the weight-loss market with new assets, including one that offers a convenient monthly dosing schedule for patients.
The market of 2025 will be remembered for its extremes. While investors poured billions into technology sector giants and makers of weight-loss drugs, traditional pharmaceutical leaders were left behind. Nowhere is this clearer than with Pfizer Inc. (NYSE: PFE). Trading near multi-year lows around $25, the company finished the year as one of the most unloved names in the S&P 500. For the casual observer, the pessimism feels warranted: the firm has spent the past two years battling a perfect storm. Revenue from COVID-19 products faded faster than expected, several high-profile pipeline candidates failed in trials, and activist investors launched a public campaign against management. Still, smart investing often requires venturing where others refuse to go. With activist Starboard Value exiting in November and guidance reset to more realistic levels, the worst appears to be behind Pfizer. The bad news is largely priced in, and Pfizer’s stock has likely found a floor. As we enter 2026, the company presents a rare scenario: a blue-chip name trading at a distressed price, paying a solid dividend while it quietly rebuilds its pipeline. The Mathematical Case: Why the Price Is Wrong For value investors, the argument for Pfizer is simple arithmetic. The market is pricing the company as if its earnings will permanently shrink, creating a disconnect between the share price and the company’s actual cash generation. A Historic Valuation Gap Pfizer currently trades at a forward price-to-earnings ratio (P/E) of roughly 8.6x. To put that in perspective, the average company in the pharmaceutical sector trades at 15x–20x earnings, with high-growth peers like Eli Lilly (NYSE: LLY) commanding substantially higher multiples. When a company trades at 8.6x, the market is essentially assigning near-zero growth expectations. That sets a low bar: Pfizer doesn't need a miracle to see the stock rise — it just needs to demonstrate business stability. Any positive earnings surprise could trigger multiple expansion as the stock re-rates toward industry norms. The Dividend Shield Investors waiting for repricing are paid to hold the stock. - Annual Payout: $1.72 per share.
- Current Yield: Approximately 6.9%.
That yield is roughly four times the S&P 500 average and functions as a margin of safety. Even if the share price does little in 2026, a near-7% dividend provides a baseline return well ahead of most savings accounts and government bonds. Management is supporting the dividend with a $4 billion cost-savings program. By reducing administrative costs and optimizing manufacturing, the company is preserving the cash flow needed to sustain quarterly payouts. The New Foundation: Oncology Takes the Lead Much of the pessimism stems from a perceived growth gap after COVID revenues declined. Pfizer has pivoted aggressively toward oncology to fill that hole. The Guided-Missile Approach The crown jewel from Pfizer’s 2023 acquisition of Seagen is leadership in Antibody-Drug Conjugates (ADCs). Traditional chemotherapy is a broad attack that harms healthy as well as cancerous cells; ADCs act more like guided missiles, identifying cancer cells and delivering a toxic payload directly, sparing healthy tissue. This technology is already producing results. The Seagen portfolio contributed about $3.4 billion in revenue in 2024, after delivering roughly $2.75 billion in the first three quarters of 2023, driven by strong Padcev sales for bladder cancer. Navigating the Bumps The path hasn't been without setbacks. In December 2025, Pfizer reported a safety signal involving Hympavzi that included a patient death in a trial extension — a development that caused a short-term market reaction. Nevertheless, the broader thesis remains intact: the oncology franchise is deep, with more than 60 programs in development. The company has also bolstered its pipeline by licensing a promising bispecific antibody from 3SBio, reinforcing efforts to reload with potential blockbusters. Catching Up: The Strategy for Weight Loss After an early 2025 setback — when its oral GLP-1 candidate Danuglipron failed to progress — Pfizer didn't abandon the obesity market. Instead, it pivoted, buying and licensing assets to re-enter the race. The Injectable Strategy (Metsera) In November, Pfizer acquired Metsera for about $7 billion, gaining MET-097i, a next-generation injectable. Unlike current market leaders that require weekly or more frequent injections, MET-097i could potentially be administered monthly, offering a convenient advantage for patients. The Oral Strategy (YaoPharma) Recognizing some patients prefer pills to injections, Pfizer also signed a licensing deal with YaoPharma for a small-molecule GLP-1 candidate, giving the company exposure to both oral and injectable approaches. Why This Matters Pfizer’s current share price implies essentially zero value for its obesity pipeline. With expectations so low, any clinical progress from the Metsera or YaoPharma assets represents pure upside. Pfizer does not need to lead the market — it only needs to capture a slice of an anticipated $100 billion opportunity. The Risk/Reward Equation: 2026 Belongs to Value Pfizer enters 2026 as a company in transition but with a strengthened financial position. Management has set a revenue floor of roughly $61 billion for 2026, a realistic target that reduces the uncertainty that haunted the stock. For investors the math is straightforward. At about $25 per share, downside risk is cushioned by a healthy dividend and historically depressed valuation. Upside is meaningful: continued growth in oncology or clinical progress in weight-loss programs could trigger a sharp repricing. The unloved stocks of one year often become the market darlings of the next. With the activist drama behind it and the balance sheet stabilized, Pfizer has moved from a falling knife into a potential foundational holding for value-oriented portfolios. For this unloved giant, 2026 may be the year it wakes up.
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