Pfizer Earnings: Expected Sales Decline Met With Solid Bottom-Line Growth From Cost Savings

Key Morningstar Metrics for Pfizer

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

What We Thought of Pfizer’s Earnings

Pfizer’s PFE $13.7 billion in revenue (an 8% decline) and adjusted diluted EPS of $0.92 (12% growth) allowed the firm to maintain its full-year guidance of $61 billion-$64 billion in revenue and $2.80-$3.00 in adjusted diluted EPS, which does not include a placeholder for potential new tariffs.

Why it matters: Pfizer’s operating expenses fell more than 12%, helping it work through top-line headwinds from changes to Medicare Part D and tough comparisons for covid-19 product Paxlovid. Management said that full-year performance is trending toward the high end of EPS guidance.

• Cardiomyopathy drugs including Vyndaqel grew 31%, despite Part D headwinds and new competition from BridgeBio’s Attruby, and oncology drug Padcev grew 25%.
• Pfizer has incorporated $150 million in headwinds from announced tariffs, and while no concrete guidance was given on potential upcoming pharma tariffs, Pfizer says it is already moving inventories and has ample room for additional US manufacturing.

The bottom line: We’re maintaining our $42 fair value estimate for wide-moat Pfizer, and we think investors are underappreciating the stability of the firm’s cash flow, particularly as cost-savings plans are expanding and the pipeline is advancing.

• Beyond the $4.5 billion in cost cuts to be completed this year, Pfizer announced additional savings of $1.2 billion in selling, informational, and administrative costs and $1.5 billion in manufacturing and optimization costs by 2027, for $7.2 billion in total cost savings.
• Pfizer is also working to improve R&D productivity, and we’re most focused on readouts coming later this year for Padcev (potentially expanding its use) and in early 2026 for the oral GIPR-targeting obesity program.

Coming up: Pfizer’s capital allocation this year has favored dividends and internal R&D investments. However, with the firm below its leverage target and holding $6.3 billion in net cash after a full exit of consumer business Haleon, the door is open for future M&A deals.