We recently published a list of the 7 Most Undervalued Biotech Stocks To Invest In. In this article, we are going to take a look at where Pfizer Inc. (NYSE:PFE) stands against the other most undervalued biotech stocks to invest in.

Trump’s Tariffs and the Pharma Sector

On February 21, Jared Holz, Mizuho Securities America’s healthcare sector strategist, appeared on CNBC to discuss Trump’s tariffs and their effects on the American pharma sector. Although he was unsure of the intention behind these tariffs, he opined that the pharma industry was not all that special when compared to verticals such as industrials and technology, such that President Trump would intend to enlarge its presence in the US.

The tariffs thus encompass the grander plan surrounding how the pharmaceutical industry fits into scaling up domestic manufacturing. A majority of pharma and biotech companies have a significant presence in the US. However, some questions still stand, such as whether they will hire more people in the US compared to Europe or Asia and whether they will bring back more business to America.

Holz was unclear about the answers to these questions, but he believed that anything coming out of Europe or China would obviously be fair game. Further discussing the scenario, he said that boosting manufacturing facilities and capacities from scratch is not an easy endeavor, as it takes considerable years to reach a point where companies can domestically produce at a high rate. Therefore, the impact of tariffs on the production capacity and on-shoring of pharma companies remains fuzzy.

READ ALSO: 10 Best Performing Pharma Stocks So Far in 2025 and 11 Best Pharma Stocks to Buy According to Hedge Funds.

How Will the Pharma Industry Perform in 2025?

We further discussed the potential impacts of Trump’s tariffs and the performance of the pharma industry in a recently published article on the 10 Oversold Pharma Stocks to Buy According to Analysts. This excerpt from the article offers another analyst’s point of view:

“On February 20, Emily Field, Head of European Pharma Research at Barclays, appeared on CNBC to discuss the dynamics of the pharmaceutical sector, the impact of US tariffs, and the performance of obesity drugs. She believed the industry may not underperform this year, at least in the first half. However, there are still several questions surrounding the performance of obesity drugs, as major players in the domain have exhibited contrasting previous year performance.

Talking about the tariffs, she said that their materialization poses a big open question for the pharmaceutical sector as some companies assemble their products in the US after manufacturing them abroad. Manufacturing costs are thus pretty low for these companies, which is a significant point to consider when determining the impact of tariffs. She believed that absorbing the additional cost of the tariffs would be very manageable for these companies. The market has reached the tail-end of the earnings season, and the situation hasn’t come up much on earnings calls over this quarter.”

Our Methodology

We sifted through stock screeners, online rankings, and ETFs to compile a list of 15 biotech and biopharma stocks with a forward P/E of less than 15. We then selected the top 7 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Pfizer Inc. (NYSE:PFE)

Forward P/E: 8.82

Number of Hedge Fund Holders: 92

Pfizer Inc. (NYSE:PFE) is a global biopharmaceutical company that manufactures, develops, markets and sells biopharmaceutical products worldwide. It advances wellness, prevention, treatment, and cures in developing and emerging markets. The company’s goal is to become a world-class oncology leader. It is already the third-largest biopharma company in oncology in the United States and has plans to continue its progress in oncology for the rest of the decade.

Pfizer Inc. (NYSE:PFE) has an attractive dividend yield of 6.3%, higher than most blue-chip stocks. Its management has reiterated plans to support and raise this dividend periodically, recently announcing a 2.4% increase in early December.

Pfizer Inc. (NYSE:PFE) is focused on its oncology pipeline for future growth, with its 2030 goals entailing the addition of several new blockbuster drugs to its portfolio. The company is expected to continue looking for opportunities to acquire promising pharmaceutical companies to augment its pipeline further. It used a significant portion of its pandemic profits on the $43 billion acquisition of Seagen, a biotech company specializing in oncology.

This strategy is working well for Pfizer Inc. (NYSE:PFE) as management estimates earnings growth between 10% and 18% for 2025. Analysts also estimate the company’s earnings to grow by around 14% annually over the next 3-5 years.

Overall, PFE ranks 1st on our list of the most undervalued biotech stocks to invest in. While we acknowledge the potential of PFE as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.