Skip to Content
Stock Analyst Update

Pfizer Posts Slightly Better-Than-Expected Q2

We don’t expect any significant fair value estimate changes for this wide-moat company based on the minor outperformance.


Pfizer (PFE) reported second-quarter results slightly ahead of our and consensus expectations, but we don’t expect any significant fair value estimate changes based on the minor outperformance. We continue to view the stock as undervalued, with the market likely underappreciating the firm’s strong immunology pipeline and entrenchment in vaccines. Pfizer’s recent stock appreciation appears partly driven by the firm’s progress with a COVID-19 vaccine along with its partner BioNTech, but we would urge caution in ascribing significant value related to the COVID-19 vaccine; a long duration of COVID-19 vaccine cash flows seems unlikely due to the probable entry of competitive, not-for-profit vaccines and potentially less demand following the pandemic period. Nevertheless, Pfizer’s remarkable ability to potentially bring a vaccine to the market in late 2020 shows the strength of the firm’s ability to develop innovative treatments, a core element supporting its wide moat rating.

In the quarter, total sales fell 3% operationally (excluding corporate restructuring) as headwinds including COVID-19 disruptions (net negative 4% impact) and generic Lyrica competition outweighed gains from oncology drugs, rare-disease drug Vyndaqel, and cardiovascular drug Eliquis. We expect sales growth to accelerate as COVID-19 disruptions ease and the impact from generic Lyrica annualizes. Additionally, the divestment of Upjohn (mature drugs) in the fourth quarter should place the remaining Pfizer business in a strong position for growth beginning in 2021, led by recently launched products and new pipeline drugs. Also, we expect Pfizer’s solid entrenchment in pneumococcal vaccine will strengthen with its next-generation Prevnar 20 vaccine, which has shown favorable data that should defend against an emerging threat from a new Merck vaccine and potentially drive increased pricing power from a franchise representing close to 10% of current sales.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Damien Conover does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.