Pfizer Inc. offered a cautiously optimistic forecast for 2025 on Tuesday, predicting adjusted profits that align with Wall Street expectations and signaling stability despite mounting investor pressure and regulatory hurdles. The pharmaceutical giant's outlook, which included steady revenues for its COVID-19 products, helped its shares rise by approximately 4% in early trading.
The New York-based drugmaker expects adjusted earnings of $2.80 to $3 per share for 2025, compared to analysts' consensus estimate of $2.88, according to data compiled by LSEG. Pfizer also forecast revenue in the range of $61 billion to $64 billion, marginally below Wall Street's estimate of $63.26 billion.
The announcement comes at a pivotal moment for Pfizer, which has seen its stock decline by nearly 12% this year-trading at less than half its peak value during the height of the COVID-19 pandemic. Much of the slump has been attributed to waning sales of its COVID-19 vaccine and antiviral drug Paxlovid, which once drove record-breaking revenue.
Investor concerns have been compounded by activist hedge fund Starboard Value, which has been highly critical of Pfizer's strategic decisions. In October, Starboard accused Pfizer's management of overpaying for acquisitions while failing to deliver profitable new products from those deals or its internal research and development pipeline.
"While we see several assets in Pfizer's pipeline (particularly in oncology) that could make the story more interesting, we believe that further advancement ... will be necessary to change the current narrative on shares, which would primarily occur 2026+," JP Morgan analyst Chris Schott wrote in a note to clients.
Pfizer has spent the past year restructuring its operations, shedding non-core businesses, and cutting costs to offset its recent revenue challenges. The company also faces additional headwinds from changes to Medicare's Part D prescription program under President Biden's Inflation Reduction Act, which Pfizer estimates will reduce its 2025 revenue by roughly $1 billion.
The changes include new manufacturer discounts and structural reforms to Medicare's drug benefit plan. Although these policies are intended to lower out-of-pocket costs for seniors, they pose financial challenges for pharmaceutical companies. Pfizer noted that while the $2,000 cap on annual out-of-pocket expenses for Medicare beneficiaries may boost demand, the new discounts are expected to outweigh any potential gains.
Despite these challenges, Pfizer remains focused on growth through innovation. The company has highlighted promising developments in its oncology pipeline and other core therapies as key drivers for its future success. Pfizer's recent upward revision for its 2024 outlook underscores the company's confidence in its long-term strategic direction.
The pharmaceutical sector as a whole is grappling with a challenging macroeconomic environment, activist investor scrutiny, and increased regulatory pressure. Pfizer's ability to stabilize its revenue and forecast profitability has provided investors with a degree of reassurance as the company works to rebuild its market position.
Pfizer is scheduled to hold a conference call with analysts to discuss its projections and address ongoing investor concerns. Analysts will be closely monitoring the company's execution of its growth strategy, particularly in light of its high-profile acquisitions and pipeline advancements.
