Pfizer’s Dividend Safety: Balancing Innovation and Shareholder Returns

Pfizer Inc. (PFE) reported mixed Q1 2025 earnings with revenue down 8% YoY to $13.7 billion, missing analysts' estimates. However, EPS of $0.92 beat consensus by $0.25. The company returned $2.4 billion to shareholders through dividends during the quarter and raised payouts for 15 years in a row. Pfizer's strong balance sheet and emphasis on operational efficiency and financial discipline have contributed positively to its bottom line.

Pfizer Inc. (PFE) reported mixed earnings for the first quarter of 2025, with revenue declining by 8% year-over-year (YoY) to $13.7 billion, missing analysts' estimates. However, the company's earnings per share (EPS) of $0.92 exceeded consensus expectations by $0.25. Pfizer returned $2.4 billion to shareholders through dividends during the quarter and maintained its streak of 15 consecutive years of dividend increases.

The company's stock price, currently trading at $25.35, has fallen by 15.5% over the past year, largely due to declining pandemic-related sales and increased competition in key therapeutic areas. Despite this challenging environment, Pfizer's adjusted gross margin increased to 81%, reflecting improved product mix and reduced royalty obligations. The company's CEO, Albert Bourla, emphasized the focus on late-stage, high-potential assets in oncology, vaccines, inflammation and immunology (I&I), and internal medicine.

Pfizer's pipeline development remains a critical focus for investors. The company has around 108 clinical programs underway, with 2025 shaping up to be a pivotal year for regulatory decisions and Phase 3 readouts. Key assets include sasanlimab, a promising treatment for non-muscle invasive bladder cancer (NMIBC), and Padcev, a first-line treatment for locally advanced/metastatic urothelial cancer. Additionally, Elrexfio, a therapy for relapsed/refractory multiple myeloma, is expected to have a Phase 3 readout this year.

The company's cost-cutting strategy and pipeline development are designed to stabilize margins and drive long-term growth. Wall Street analysts rate Pfizer as a "Moderate Buy," with an average price target of $27.71, suggesting a potential 12.7% increase over current levels. Investors with a long-term outlook may find Pfizer's stock an appealing entry point, given its 22% discount from its 52-week high of $31.54. However, the stock's revival will depend on the success of its maturing pipeline in generating significant new revenue streams.

Pfizer expects its 2025 sales to decline by about $1 billion due to changes under the Inflation Reduction Act (IRA) Part D reform. The company anticipates a $500 million increase in revenue from more patients using its drugs, thanks to lower out-of-pocket costs. However, this is offset by a $1.5 billion loss due to increased costs in the catastrophic phase of Medicare Part D. Cheaper options may benefit from certain reforms more than expensive drugs because the coverage gap is being removed.

References:
[1] https://www.ainvest.com/news/pfizer-stock-20-buy-dip-2507/
[2] https://www.benzinga.com/analyst-stock-ratings/analyst-color/25/07/46401541/pfizer-faces-1-billion-ira-reform-hit-analysts-2025-outlook-flat