Pfizer (NYSE:PFE) raised its revenue guidance in the second quarter of 2026, held its earnings guidance and announced another round of cost cuts. It also reported a loss of $0.04 a share.
That split is the story. Pfizer makes prescription medicines and vaccines, including Eliquis, Padcev, Prevnar and Vyndaqel, and sells them to patients, hospitals and governments. The revenue lasts only as long as the patents do. So the question isn’t really about one quarter. At 9.24 times forward earnings, is the market already pricing in the decline analysts expect, or is there more to discount?
A Drug Portfolio in Mid-Handoff
Pfizer’s edge is breadth. No single product defines it, and the portfolio spans cancer, primary care and specialty medicine, with parts of the oncology lineup, including Padcev, added through acquisitions. That breadth cushioned the collapse of COVID sales. Paxlovid revenue fell 95% operationally and Comirnaty fell 34%, yet excluding those two products, revenue still grew 5%. Launched and acquired products grew 18%. It’s a handoff that pharma names facing patent cliffs are all attempting.
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Cost Cuts, Cancer Wins and One Expensive Miss
The evidence for a widening moat is real but mixed. Padcev grew 23% on share gains in first-line bladder cancer, and Lorbrena, a lung cancer drug, grew 37%. Pfizer also added $2.5 billion of anticipated savings, to be realized from 2027 through 2029.
Then came the miss. A Phase 3 trial of sigvotatug vedotin, a lung cancer candidate, didn’t show a statistically significant survival improvement over docetaxel, and Pfizer wrote down $3.8 billion of related assets. Together with an Oxbryta write-off, that pushed the quarter into a reported loss, while adjusted EPS (which strips out items like amortization and impairments) came in at $0.77.
Obesity is the long bet. Pfizer plans 10 Phase 3 studies of its monthly berobenatide this year, which puts it in the field with other obesity drug developers, though nothing from that program contributes to earnings yet.
Is the Eliquis Beat Hiding a Thinner Business?
The strongest objection is that the raised outlook leans on one drug. Eliquis grew 19% operationally, but Pfizer attributed that primarily to higher net prices in the U.S., from lower rebates and a better channel mix, alongside higher global demand. Generic entry is already cutting into Eliquis in some international markets, and Pfizer’s guidance absorbs roughly $1.1 billion of lost revenue from generic and biosimilar competition. More products are expected to lose protection.
Still, Eliquis isn’t the whole picture. Padcev and Lorbrena grew on market share, not pricing. But if Eliquis’s pricing tailwind fades before those drugs fill the space, this quarter’s growth will look flattering in hindsight. That’s the main risk, and a low multiple doesn’t erase it.
Priced for Decline, Not for a Bargain
Pfizer trades at 9.24 times forward earnings, against 10 for its own five-year average and 18.77 for its sector. The gap to the sector is wide, but analysts expect EPS to fall 7.60% in 2026 and 2.64% in 2027, so the market is paying less for earnings that are shrinking. Pfizer’s own 2026 guidance absorbs about $0.10 from the Innovent licensing deal, a one-time charge, which makes the 2027 figure the cleaner test.
The thin discount to its own history is the telling part. A stock treated as a mispriced bargain would sit well below 10; this one sits only slightly under it. That puts Pfizer among value stocks in healthcare, yet a low multiple only helps once earnings stop falling. These multiples rest on adjusted earnings, which is reasonable given $4.3 billion of non-cash impairments distorted the reported figures, though write-downs on failed trials are a real cost of the research model.
Hedge fund interest was unchanged, with 83 funds holding the stock in the most recent quarter, the same as in the prior one. Short interest stands at 2.72%, which points to relatively limited bearish positioning.
A Fair Price Until Earnings Turn
So is Pfizer cheap for a reason? Partly. The discount to the sector has a clear cause, and the discount to its own history is too small to call a bargain. The evidence points to a business whose newer drugs are growing quickly while profits drift lower. For patient, value-minded investors who can sit through flat-to-falling earnings, and who note that Pfizer paid out $4.9 billion in dividends in the first half of the year, the setup looks reasonable. Estimates stabilizing as launched products keep growing would strengthen it. Eliquis pricing fading before Padcev and Lorbrena pick up the slack would undercut it.
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This article is originally published at Insider Monkey.
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