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• Wondering if Pfizer is a smart buy at today’s price? You are not alone, especially as value-focused investors begin to focus on the stock.

• Pfizer’s performance has been mixed lately. Shares dipped just 0.1% in the last week, inched up 1.3% over the past month, but are still down 5.9% year to date despite a 4.7% return over the last twelve months.

• Recent headlines about Pfizer have focused on its latest product developments and major moves in the pharmaceutical sector, generating speculation about the company’s future direction. These stories give investors plenty to consider regarding long-term growth prospects and short-term uncertainty.

• In terms of valuation, Pfizer scores a strong 5 out of 6 on our core checklist for undervaluation, making it a notable candidate for deeper analysis. Next, let us explore the valuation methods that matter, and stay tuned for a perspective that goes beyond the numbers alone.

Find out why Pfizer’s 4.7% return over the last year is lagging behind its peers.

A Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and discounting them back to their value today. This helps investors see what those future dollars are worth in today’s terms.

For Pfizer, the latest reported Free Cash Flow (FCF) stands at $9.95 Billion. Analysts forecast that FCF will grow steadily, with Simply Wall St extrapolating a projected FCF of $16.36 Billion in the year 2029. While analyst estimates usually cover the next five years, these longer-term numbers are model driven based on known cash flow trends.

Based on these projections and the DCF methodology, the estimated intrinsic value of Pfizer’s shares comes out to $62.40. This is a striking 59.9% higher than the current market price, indicating that the stock trades at a substantial discount according to this valuation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Pfizer is undervalued by 59.9%. Track this in your watchlist or portfolio, or discover 917 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Pfizer.

For companies like Pfizer that consistently generate profits, the Price-to-Earnings (PE) ratio is a popular and reliable valuation tool. The PE ratio tells investors how much they are paying for each dollar of current earnings, providing a useful snapshot for comparing across companies and industries.

It is important to remember that what counts as a “normal” or “fair” PE ratio varies depending on a company’s growth expectations and risk profile. Companies with higher expected earnings growth or lower risk typically justify a higher PE, while those with slower growth or greater risk generally trade on a lower multiple.

At the moment, Pfizer trades on a PE ratio of 14.53x. This is noticeably below both the industry average of 19.92x and the peer group average of 17.05x. However, benchmarks like industry averages do not always tell the whole story.

That is where the Simply Wall St Fair Ratio comes in. The Fair Ratio for Pfizer is calculated at 24.17x, reflecting a more personalized estimate based on Pfizer’s growth prospects, profit margin, industry environment, company size, and business risks. This proprietary metric offers a more tailored and holistic view of what could be considered a reasonable valuation for Pfizer compared to industry and peer averages that may not fully capture company-specific factors.

Given that Pfizer’s current PE of 14.53x is well below its Fair Ratio of 24.17x, the evidence suggests Pfizer is undervalued on this preferred metric.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1422 companies where insiders are betting big on explosive growth.

Earlier we mentioned there is an even better way to understand valuation, so let us introduce you to Narratives. In investing, a Narrative is your perspective on a company’s future, connecting the story you believe about its business, such as growth in new markets, product launches, or risk factors, to your own estimates for revenue, earnings, and margins.

Narratives make investing smarter and more personalized by linking your view of Pfizer’s story directly to a dynamic financial forecast and fair value estimate. This approach is easy to use and available to all on Simply Wall St’s Community page, where millions of investors share their views and track company progress.

With Narratives, you can see how your fair value estimate compares to today’s market price. This makes it easier to decide when a stock might be a buying opportunity or when it may be time to take profits. Even better, as new data or news emerges, each Narrative updates automatically, keeping your analysis current without any extra effort.

For Pfizer, some investors see fair value as high as $35.77 per share (expecting margin expansion and accelerated innovation), while others estimate as low as $24.00 (citing patent risks and margin pressure).

For Pfizer, we’ll make it really easy for you with previews of two leading Pfizer Narratives:

🐂 Pfizer Bull Case

Fair Value: $29.08

Undervalued by 13.9%

Expected Revenue Growth Rate: -2.66%

• Growth strategy focuses on expansion in innovative therapies and global emerging markets. The goal is to achieve margin improvement and resilience despite industry pressures.

• Recent deals and digital investments, such as the Metsera acquisition and AI-powered R&D, are expected to drive long-term earnings growth and operational efficiencies.

• Risks include regulatory pressures, patent expirations, and fierce competition. Consensus analyst targets indicate upside of 14.4% from current pricing.

🐻 Pfizer Bear Case

Fair Value: $24.00

Overvalued by 4.3%

Expected Revenue Growth Rate: -4.21%

• Stricter drug price controls, ongoing patent expirations, and intensifying generic competition are expected to pressure Pfizer’s revenues and margins over the next several years.

• Heavy reliance on bringing new R&D assets to market introduces risk, as pipeline delays or failures may not offset losses from established drugs.

• Bears believe the company is fairly to slightly overvalued at its current price. This makes downside risks more prominent than potential upside under these assumptions.

Do you think there’s more to the story for Pfizer? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include PFE.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Story Continues

Currently, Merit Medical Systems is trading at a PE ratio of 43.7x. This is significantly above both the medical equipment industry average of 28.0x and the average among its peers of 27.0x. While surface-level comparisons might suggest the stock is expensive based on earnings, it is important to consider more than just benchmarks when judging if a valuation is fair.

Simply Wall St’s proprietary “Fair Ratio” aims to provide a more accurate assessment than a simple comparison to industry or peers. This measure accounts for factors such as Merit Medical’s earnings growth, profit margin, industry landscape, company size, and inherent risks. According to the Fair Ratio, Merit Medical should be valued at 23.3x earnings, notably less than its current PE.

Comparing Merit Medical Systems’ actual multiple to its Fair Ratio, the current PE is well above what would be considered fair given its growth prospects and risk profile. This points to the stock being overvalued on this metric.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1422 companies where insiders are betting big on explosive growth.

Earlier, we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your own story about a company; it connects your perspective and expectations for things like future revenue, earnings, and margins to a forecast and, ultimately, a fair value. Narratives make investing more accessible, as they are available right inside the Simply Wall St platform’s Community page, used by millions of investors. By comparing your Narrative’s Fair Value to the market Price, you get a clear signal on when a stock might be a buy or a sell according to your view. As company news and earnings are released, Narratives update automatically to reflect new information, keeping your analysis current. For example, when analyzing Merit Medical Systems, one investor might be optimistic, assuming rapid margin expansion and targeting a future price of $122 per share. Another might focus on reimbursement delays or industry risks, setting a much more cautious target of $90. Narratives let you see and compare these perspectives clearly, helping you make truly informed investment decisions tailored to your own outlook.

Do you think there’s more to the story for Merit Medical Systems? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MMSI.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com