Pfizer Inc. (NYSE:PFE) has barely rewarded shareholders over the past year. That underperformance has left Pfizer looking inexpensive. Based on the midpoint of the company’s 2026 adjusted diluted EPS guidance range of $2.80 to $3.00, the stock trades at roughly 9.6 times forward adjusted earnings, according to our calculations. There are nine healthcare stocks that rank higher than Pfizer in our ranking of the best healthcare stocks to buy according to hedge funds. Check out the complete list here.
But a low multiple does not automatically mean a stock is undervalued. Pfizer’s 2026 EPS midpoint is below the $3.075 midpoint of its 2025 guidance, meaning earnings are still expected to decline. The real question is whether the market is looking too far into Pfizer’s current earnings pressure, or correctly anticipating a prolonged period of weak growth.
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The Discount Has a Reason
Pfizer’s 2026 outlook makes clear why investors have been reluctant to pay a higher multiple. The company expects revenue of $59.5 billion to $62.5 billion, compared with approximately $62 billion in 2025 guidance. COVID-19 products are expected to generate about $5 billion in 2026, down from approximately $6.5 billion in 2025, while products facing loss of exclusivity are expected to create another $1.5 billion revenue headwind.
That makes Pfizer’s headline earnings growth look weak. Yet an important distinction is buried in the guidance and becomes clear when you exclude COVID products and products facing loss of exclusivity. Pfizer Inc. expects approximately 4% operational revenue growth at the midpoint. That suggests the low valuation is partly a reflection of a business undergoing a transition rather than one simply losing its ability to grow. You can also read about Gilead’s HIV Concentration or Pfizer’s Patent Cliff: Which Risk is Easier to Own? in our recently published article.
What Could Change the Valuation
Pfizer Inc. has been trying to build the businesses that can eventually replace declining products, and some of those investments are beginning to look more substantial.
The company’s obesity program is particularly important. In June, Pfizer reported Phase 2b data for berobenatide, its investigational monthly GLP-1 receptor agonist, showing almost 16% non-placebo-adjusted weight loss at 32 weeks at the 2.4 mg weekly dose. Pfizer plans to advance 10 Phase 3 studies in 2026 as part of a broader program involving more than 20 obesity trials.
The oncology pipeline provides another potential source of future growth. Pfizer highlighted next-generation programs including a PD-1/VEGF bispecific antibody, an antibody-drug conjugate and a next-generation CDK4 inhibitor at ASCO 2026.
There is also a more immediate positive development in VYNDAMAX. Pfizer reached settlements with generic manufacturers that extend its effective U.S. patent expiry date to June 1, 2031, compared with the company’s previous expectation of a significant U.S. revenue decline beginning in 2029. Pfizer now expects VYNDAMAX revenue to remain relatively stable from 2028 through mid-2031, subject to other litigation.
Is 9.6 Times Earnings Cheap Enough?
This is where Pfizer becomes more interesting than a simple “cheap stock” story. At roughly 9.6 times forward adjusted earnings, the market is clearly assigning a low valuation to Pfizer. But that discount is understandable when 2026 adjusted EPS is expected to decline, and major products face COVID normalization and loss-of-exclusivity pressure.
The valuation becomes more compelling if Pfizer can convert its pipeline investments into sustainable growth. The obesity program could provide a new growth engine, oncology offers several potential catalysts, and the VYNDAMAX patent settlements have reduced one source of future revenue uncertainty.
On the other hand, much of that upside remains dependent on successful clinical development and commercialization. Pfizer expects 2026 adjusted R&D spending of $10.5 billion to $11.5 billion, showing how much capital it still commits to rebuilding the pipeline.
The Bottom Line
Pfizer Inc. does not look expensive. At less than 10 times expected 2026 adjusted earnings, the stock trades at a valuation that reflects some skepticism about its growth prospects. The more important question is whether that skepticism has gone too far.
The answer depends on what happens after the current earnings decline. If Pfizer’s underlying business can grow while its obesity and oncology investments create new commercial opportunities, today’s low multiple could be a discount. If those investments fail to offset COVID-related declines and loss-of-exclusivity pressure, the low valuation may simply reflect the company’s weaker earnings outlook.
The company therefore looks less like a straightforward bargain and more like a valuation bet, where investors are paying little for today’s earnings, but they need Pfizer’s pipeline to turn that cheap valuation into genuine long-term value.
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This article is originally published at Insider Monkey.
