Andrew Bary

Pfizer stock fell to the lowest closing price since 2012, putting its yield near 8%, after cautious comments from a UBS analyst ahead of the company's quarterly earnings on April 29.

Pfizer shares declined 3.5% to $21.84 after hitting a new 52-week low of $21.44. The closing price is no higher than where the stock traded in 1997, even though the stock traded above $60 in late 2021 amid enthusiasm for the company's Covid-19 drugs.

All that has resulted in a generation of frustration for investors in what once was the top drug company in the world by market value. Pfizer is now valued at $125 billion, just 20% of the total for industry leader Eli Lilly.

Pfizer now yields 7.9%, based on the company's $1.72 annual payout. That is the highest among major drug stocks and one of the largest yields in the S&P 500 index.

When yields rise to such levels, investors begin to wonder whether the dividend is safe. But in this case, management has offered reassurance, reaffirming its support for the payout, most recently on the fourth-quarter earnings conference call in early February.

"We are dedicated to maintaining and growing our dividend and meeting our de-levering targets by the end of 2025, providing for a more balanced capital allocation," said Chief Financial Officer David Denton.

Pfizer boosted its quarterly payout by a penny to 43 cents in December, continuing a string of yearly increases of that size. The company's dividend payout ratio is close to 60%, based on projected 2025 earnings of about $2.90 a share -- high relative to the S&P 500, but not excessive.

The company didn't buy back stock in 2024 and doesn't intend to do so in 2025 as it focuses on cutting debt incurred from a series of acquisitions. Pfizer ended 2024 with about $45 billion of net debt, or debt less cash.

Given the low stock price, the lack of a buyback -- a result of the company's expensive moves to bolster its drug pipeline with acquisitions -- is another frustration for investors.

In a client note Tuesday, UBS analyst Trung Huynh wrote that Pfizer's Covid drug sales, both the Paxlovid treatment for the virus and its Comirnaty vaccine, could fall short of the Wall Street consensus in the first quarter.

The UBS analyst reduced his 2025 profit estimate to $2.89 from $2.92 a share. He forecasts a first-quarter profit of 67 cents, versus a 71-cent share consensus.

"We remain Neutral on Pfizer, and need to see a stabilizing tail from the COVID business, continued growth in key assets (Nurtec, ADCs, etc), and execution on the pipeline to become more constructive on the name," Huynh wrote. ADC refers to cancer treatments called antibody drug conjugates.

Investors, he wrote, are eager for more data on Pfizer's GLP-1 diet drug danuglipron, which is now in clinical trials. The drug comes in oral form, which could give it scope to compete with existing GLP-1 drugs that now are available only in injectable form.

Write to Andrew Bary at andrew.bary@barrons.com

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April 08, 2025 17:26 ET (21:26 GMT)

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