Pfizer (NYSE:PFE) Stock Rebounds 10% as Wall Street Reassesses Its Undervalued Power

NYSE:PFE Surges as Undervalued Dividend Giant Reignites Bullish Momentum

Pfizer Inc. (NYSE:PFE) has staged a striking recovery, rising over 10% from late April as investors increasingly pile into one of the most undervalued names in the pharmaceutical sector. PFE currently trades near $25.31, yet the stock holds a projected 52% upside based on DCF valuation assumptions. The turnaround comes amid accelerating call option activity, a strong 6.9% dividend yield, and renewed confidence in Pfizer’s late-stage pipeline. Recent resistance above $27.50 has seen rising open interest, while put volume remains depressed—evidence that options traders are betting on further gains into year-end.

Options Traders Price in Upside as PFE Tests $25.31

The current options market structure around NYSE:PFE shows bullish speculation. Elevated call interest at the $26 and $27.50 strikes and light put volume below $25 show a strong upside skew. High premiums for out-of-the-money calls further validate the market’s belief that PFE may break above current levels before December 2025. This activity suggests anticipation of upcoming catalysts—notably from the company’s R&D pipeline and integration of Seagen oncology assets.

Momentum Building: RSI at 69 Signals Investor Rotation into PFE

Technical momentum has accelerated, with Relative Strength Index nearing 69, a level not seen in years. The bullish divergence reflects renewed institutional appetite, especially as Pfizer’s free cash flow stabilizes around $15B TTM and cost-cutting measures gain traction. This momentum isn’t driven by hype but supported by clear margin recovery and product validation.

Massive Cost-Saving Push and Margin Expansion Define 2025 Outlook

Pfizer’s aggressive operational streamlining is on track to unlock $4.5B in cost savings by 2025, with an added $1.2B by 2027 from digital automation and simplification. These efforts have already lifted gross margins from 62.3% in 2021 to 74.4% currently, a level more reflective of pre-COVID stability. While ROIC remains below long-term averages, the margin rebound suggests early execution on Pfizer’s recovery roadmap.

R&D Muscle: $10.5B Budget Powers Hympavzi, Vepdegestrant, Abrysvo, Adcetris

Pfizer’s $10.5B R&D war chest is finally producing high-impact results. Hympavzi, a gene therapy for hemophilia, recently showed statistically significant results in a Phase 3 trial, targeting a $27B global market by 2034. Meanwhile, Vepdegestrant, an oral SERD, reduced progression risk by 43% vs fulvestrant in ER+/HER2- breast cancer patients—an area projected to grow at a 9.4% CAGR.

Simultaneously, Abrysvo is expected to dominate the RSV vaccine market with forecast peak sales of $4B, while Adcetris, a Hodgkin lymphoma drug acquired through Seagen, is now FDA-approved and could reach $2.5B in annual revenue by 2030. These developments represent Pfizer’s strategic shift from pandemic windfall to oncology and immunology leadership.

Valuation Disconnect: P/E at 7.49 and 52% Upside to $217B Fair Value

With Pfizer’s TTM free cash flow at $15B, conservative modeling (2% FCF CAGR) pegs the firm’s fair value at $217B, vs a current market cap of $142B—a massive 52% gap. Pfizer’s P/E (Non-GAAP) of 7.49 and EV/EBITDA of 7.8 remain far below sector medians. Price-to-book sits at 1.51, an anomaly for a global pharma leader. The 8.2% FCF yield reinforces the deep value thesis.

Dividends Hold Strong: 7.07% Yield with 5.2% CAGR in Payouts

Even amid post-pandemic profit resets, NYSE:PFE maintains a 7.07% forward dividend yield, over 3x the sector average. The dividend has compounded at 5.21% annually over 10 years, and despite a higher payout ratio, free cash flow coverage remains robust. Pfizer’s shareholder returns now mirror a defensive income strategy with long-term equity upside.

Segment Breakdown: Rebuilding from Pandemic Pivot

Primary Care sales fell from $74.2B in 2022 to $28.6B, as Comirnaty and Paxlovid revenues collapsed post-COVID. However, this is still nearly 2x 2020 levels. Pfizer is now doubling down on mRNA expansion and next-gen vaccines to fill that gap.

Specialty Care and Oncology remain key growth vectors. Specialty Care pulled in $16.8B LTM, with immunology and gene therapy pipelines in focus. Oncology generated $15.8B, led by Ibrance, Xtandi, and Seagen’s Adcetris. The latter will be central to Pfizer’s goal of offsetting Ibrance’s 2027 patent cliff.

The emerging Business Innovation segment delivered $1.15B LTM, focused on AI tools, biotech investments, and startup acceleration through Pfizer Ignite and the Breakthrough Growth Initiative.

Risks: Political Pressure, Patent Cliffs, and Mixed R&D Returns

There are still challenges. The White House’s drug price alignment initiative could cut US pharma revenue by 24%, directly impacting Pfizer. FX volatility, Seagen integration costs, and generic threats to drugs like Eliquis (patent expires 2026) could weigh on near-term profitability. Danuglipron and DMD gene therapy setbacks show that not all R&D bets will pay off.

Insider Confidence and Institutional Positioning

Track insider trading here. While major institutions maintain overweight positions, insider activity remains steady, signaling board-level confidence in Pfizer’s long-term direction.

Verdict: NYSE:PFE Is a Buy with 52% Upside and 7% Yield

Pfizer is pricing in near-term execution risk but not the long-term monetization of its oncology pivot and pipeline. With cost optimization underway, new drug approvals accelerating, and a safe 7% yield, NYSE:PFE offers a rare deep-value opportunity in large-cap pharma. The valuation disconnect is too wide to ignore. This is a Buy at current levels with a projected upside of 52% and a sustainable income profile.

That's TradingNEWS