Should You Reconsider Pfizer as Shares Fall After Latest Drug Pipeline Setback?

If you are wondering what to do with your Pfizer shares right now, you are not alone. Maybe you are eyeing the stock’s steady slide over the past year and thinking of bailing out, or perhaps you are looking for an undervalued giant ready for a comeback. In either case, there is more to the story than just price charts and headlines.

Pfizer’s stock is trading at $23.76 as of the most recent close, with year-to-date returns at -10.7% and a one-year decline of -12.6%. Over three years, the price drop stretches to -36.0%, erasing the pandemic-era highs and delivering negative five-year performance as well. These figures may look discouraging at first glance, especially for long-term holders. But every downturn comes with questions and, sometimes, hidden opportunities.

In the background, market developments such as shifting sentiment in pharma and larger debates over drug pricing reform have increased volatility and uncertainty, leading some investors to reassess the risks tied to the sector. However, the real test is not whether recent moves have been up or down, but whether Pfizer’s current stock price represents genuine value or a value trap.

That is where a systematic analysis comes in. Pfizer’s valuation score stands at 6 out of 6, indicating it is undervalued across every major metric we checked. In the next section, we will break down each of these approaches to see how the numbers stack up. At the end, I will share an even more insightful way to think about what Pfizer is really worth in your portfolio.

Why Pfizer is lagging behind its peers

Approach 1: Pfizer Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a valuation method that estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to today’s dollars. This approach looks past short-term bumps, focusing on the fundamental ability of a business to generate cash over time.

For Pfizer, the most recent figures show Free Cash Flow at $12.03 billion. Analyst estimates suggest these annual cash flows will rise gradually over the next five years, with projections continuing into 2035 based on expected trends. According to these forecasts, Pfizer could generate around $16.85 billion in Free Cash Flow by 2029, with the next decade seeing this number increase modestly as projected by the model.

Using the DCF method, Pfizer’s intrinsic value is estimated at $67.27 per share. Compared to its recent closing price of $23.76, this suggests the stock is trading at a 64.7% discount and appears significantly undervalued by this measure.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Pfizer.

Our Discounted Cash Flow (DCF) analysis suggests Pfizer is undervalued by 64.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Pfizer Price vs Earnings

For companies like Pfizer that are consistently profitable, the Price-to-Earnings (PE) ratio is a widely used valuation tool because it helps investors quickly compare a company's share price to its underlying earnings power. This makes the PE ratio especially relevant for established businesses with reliable earnings history.

What counts as a “normal” or “fair” PE ratio varies depending on factors such as a company's growth prospects, perceived risk, profit margins, and how it compares with its industry peers. Higher growth companies typically command higher PE ratios, while greater risks can lower that number.

Pfizer currently trades at a PE ratio of 12.6x, notably below the Pharmaceuticals industry average of 18.3x and the peer group average of 18.3x. On the surface, this suggests the market is pricing Pfizer at a discount compared to similar companies in the sector.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in. The Fair Ratio for Pfizer is 22.4x, which is derived from an in-depth model that takes into account not only earnings growth and profitability, but also market cap, risk profile, and industry factors. This approach provides a more nuanced and comprehensive benchmark than simple peer or industry averages because it adjusts for the unique characteristics of each company.

With its actual PE of 12.6x well below the Fair Ratio of 22.4x, Pfizer appears meaningfully undervalued based on this metric.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Pfizer Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply your story about a company, where you connect the dots between how you see its future, which numbers you expect, whether for revenue, earnings, or margins, and what you believe is a fair price.

Narratives move beyond the numbers to help you link Pfizer’s business story to a forecast and ultimately to a fair value. This approach lets you see exactly how your view stacks up against other investors. On Simply Wall St’s platform, Narratives are easy to use and accessible within the Community page, where millions of investors share and update their perspectives. This makes it simple to test your own ideas with real-time market context.

What makes Narratives especially powerful is that they update as new events, such as earnings announcements or significant news, come in. This ensures you always have a dynamic, up-to-date viewpoint. By comparing your Narrative’s Fair Value to the current market price, you can make clearer, more personalized decisions about whether to buy or sell.

For example, if you think Pfizer’s new products will drive steady growth, your Narrative might estimate a fair value of $35.77 per share. A more cautious investor, worried about regulatory risks, might set it at just $24.00. Narratives help you visualize these ranges and where your conviction lines up on the spectrum, so you can invest with greater confidence and clarity.

Do you think there's more to the story for Pfizer? Create your own Narrative to let the Community know!

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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