Shares of Pfizer (PFE) surged in trading after the pharmaceutical and biotech company provided its FY25 forecast, which was in line with Wall Street’s expectations. The company anticipates that it will generate FY25 revenues between $61 billion and $64 billion. According to Reuters, this is slightly below Street estimates of $63.26 billion.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
Pfizer Expects Steady Sales of its COVID-19 Vaccine
In addition to its revenue forecast, Pfizer has projected that its FY25 sales of the COVID-19 vaccine and drug will remain consistent with 2024 levels. Furthermore, the company expects its adjusted earnings to range between $2.80 and $3 per share. For reference, analysts are expecting earnings of $2.88 per share, according to LSEG data.
Notably, Pfizer’s FY25 revenue forecast takes into account a $1 billion hit due to changes to Medicare’s Part D prescription program under President Biden’s Inflation Reduction Act. The addition of new manufacturer discounts is expected to outweigh the benefits of the $2,000 out-of-pocket cap for seniors starting next year.
Medicare plans are offered by private insurers, who receive a fixed payment from the U.S. government to manage healthcare for older individuals. Medicare Part D is a voluntary outpatient prescription drug benefit provided through private plans contracted with the federal government.
Pfizer Is on a Cost-Cutting Spree
In light of these financial pressures, including the impact of Medicare policy changes, Pfizer has been forced to implement a cost-cutting strategy. This includes shedding non-core businesses in order to reduce debt and streamline operations. Specifically, the company has achieved net cost savings of $4 billion through 2024 and expects an additional $500 million in savings in 2025 as it works to offset challenges in its business.
Pfizer Has Been Targeted by Activist Investors
These ongoing financial struggles have made Pfizer a target for activist hedge fund Starboard Value, which criticized the company earlier this year for overspending on large acquisitions without delivering profitable new drugs.
Is PFE a Good Buy Right Now?
Analysts remain cautiously optimistic about PFE stock, with a Moderate Buy consensus rating based on eight Buys, 10 Holds, and one Sell. Year-to-date, PFE has declined by more than 6%, and the average PFE price target of $31.56 implies an upside potential of 25% from current levels.
