Pfizer (NYSE: PFE) closed Friday at $26.76, marking its sixth consecutive session of gains and a weekly advance of 7.0%, nearly double the S&P 500's 3.6% rise. The rally followed the company's second-quarter earnings report, which showed adjusted earnings per share of $0.77, beating the consensus estimate of $0.68 by 13.2%. Revenue also came in 4.4% above expectations at $15.034 billion.
The stock's dividend yield now stands at 6.43%, based on the indicated annual dividend of $1.72. This yield is notably higher than the 5.4% upside implied by the FactSet consensus price target of $28.21. A simple illustrative calculation suggests a one-year gross return of 11.8% if the dividend remains unchanged and the average target is achieved, though this is not a forecast.
Strong Core Performance Offsets COVID Decline
Excluding COVID products, Pfizer's revenue grew 5% on an operational basis, with newly launched and acquired products contributing to an 18% increase. Key growth drivers included Eliquis, co-marketed with Bristol Myers Squibb (NYSE: BMY), which generated $2.425 billion in Q2 sales, up 21% year-over-year. The Vyndaqel family brought in $1.762 billion, up 9%, while Padcev and Lorbrena posted double-digit growth of 23% and 41%, respectively.
However, the pandemic-related portfolio continued to contract sharply. Comirnaty sales fell 32% to $261 million, and Paxlovid plummeted 95% to just $21 million. The company's guidance reflects this trade-off: Pfizer raised its non-COVID product forecast by $1.5 billion while cutting anticipated COVID sales by $1 billion, resulting in a net midpoint increase of only $500 million.
Guidance and Cost Savings
Pfizer maintained its 2026 adjusted EPS guidance at $2.80–$3.00, with a midpoint of $2.90. The company also introduced an additional $2.5 billion in cost savings for 2027–2029, bringing total anticipated savings to $9.7 billion. CEO Albert Bourla emphasized the focus on efficiency, noting, "We are creating efficiencies… and we reinvest in R&D."
Capital allocation remains a balancing act. In the first half of the year, Pfizer allocated $5.3 billion to internal research and development, while cash dividends totaled $4.9 billion—equivalent to 92% of its R&D spending. The company's dividend yield is significantly higher than its peers: 2.54 percentage points above Bristol Myers, 3.06 points above GSK (NYSE: GSK), and 3.79 points above Merck (NYSE: MRK).
Analyst Reactions and Risks
Despite the earnings beat, analysts maintained a cautious stance. Bernstein and Guggenheim both lowered their price targets on Friday, though they kept their recommendations unchanged. The FactSet consensus remains a Hold, with 8 Buy, 1 Overweight, 18 Hold, and 2 Sell ratings, and an average target of $28.21.
RBC Capital analyst Trung Huynh described the quarterly performance as broad-based but noted that Pfizer needs new catalyst delivery to restore its growth profile. Investors are watching the development of mevrometostat and Metsera's obesity pipeline as potential future drivers.
The company also faces a leadership transition, with CFO Dave Denton departing on August 15 and Cecile Guegan stepping in as interim CFO on August 16. Additionally, the $4.3 billion impairment taken this quarter highlights ongoing acquisition risk. Other risks include patent expirations, failed trials, pricing pressures, and continued COVID-related revenue decline, which could pressure dividend coverage.
