Pfizer (PFE) Valuation in Focus Following FDA Approval of Updated COVID-19 Vaccine

Pfizer (PFE) just landed a significant regulatory win. On August 27, the company and its partner BioNTech announced that the U.S. Food and Drug Administration approved their updated LP.8.1-adapted monovalent COVID-19 vaccine. This new version is cleared for adults aged 65 and over, as well as younger high-risk individuals, thanks to clinical data showing it provides stronger immune protection against multiple newer COVID strains. For investors wondering where this leaves Pfizer as COVID revenue stabilizes, this FDA nod keeps the company’s vaccine business in the spotlight and could open the door to more recurring demand in the higher-risk population.

Looking at the bigger picture, the news comes at an interesting moment for Pfizer’s stock. Over the past year, shares fell about 6%, but recent weeks have seen a bit of momentum with gains of 5% in the past month and almost 6% over the past 3 months. This turnaround follows a tough period marked by falling COVID product sales and challenges like major patent expirations looming from 2026 onward. However, Pfizer's expanded vaccine approvals and continued work in oncology suggest that new catalysts may be on deck as the company remakes its product lineup.

So, after this year’s mixed performance and fresh regulatory tailwinds, the real question is whether Pfizer is now trading at a bargain or if investors should be cautious about how much future growth is already built into the share price.

Most Popular Narrative: 19.1% Undervalued

According to a widely followed narrative, Pfizer’s current share price is seen as offering a solid discount to its fair value, reflecting optimism about the company's transition beyond Covid-related products.

I think that Pfizer has a strong pipeline. The acquisition of Seagen added many new oncology products that will continue to grow by 14%, partially offsetting the decline in sales of the Covid-19 vaccines. This should keep revenue flat, possibly growing in low to mid single digits in an optimistic scenario.

Curious how this fair value was calculated? The most bullish assumptions in this narrative point to operational margin strength and future product launches well above market expectations. What are the numbers behind this confidence? Discover which variables could supercharge Pfizer's valuation and why the growth forecast might surprise you.

Result: Fair Value of $30.62 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, still, stubbornly high debt levels and the possibility of a dividend cut could challenge the case for Pfizer’s undervaluation in the near term.

Find out about the key risks to this Pfizer narrative.

Another View: DCF Backs Up the Bullish Case

Looking beyond sentiment and industry multiples, our SWS DCF model also points to Pfizer being undervalued. This supports the view that its current price could be a bargain. But does the future play out as forecast?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Pfizer for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Pfizer Narrative

If you have a different perspective or want to dig deeper into the numbers, you can put your own story together in just a few minutes. Do it your way.

A great starting point for your Pfizer research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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