Pfizer to Face Several Headwinds: Can It Successfully Navigate Them?
Though Pfizer expects a moderate negative impact on revenues from the loss of exclusivity ('LOE') in 2025, the impact is expected to be significant in the 2026-2030 period as several of its key products, including Eliquis, Vyndaqel, Ibrance, Xeljanz and Xtandi, will face patent expirations.
In addition, Pfizer expects an unfavorable impact of approximately $1 billion from the Medicare Part D redesign under the Inflation Reduction Act (IRA), which takes effect in 2025. Higher-priced drugs, including Vyndaqel, Ibrance, Xtandi and Xeljanz, are expected to be most affected by IRA.
Moreover, stocks of vaccine makers like Pfizer have been under pressure with the appointment of Robert F. Kennedy Jr., a well-known vaccine skeptic, as the Secretary of Health and Human Services. In addition to all this, uncertainties around tariffs and a volatile macro environment, coupled with escalating geopolitical tensions in various parts of the world, have muted economic growth.
However, despite all the headwinds, we believe Pfizer's key drugs like Vyndaqel, Padcev and Eliquis and new and newly acquired products should continue to drive top-line growth. Pfizer's significant cost-reduction and efforts to improve R&D productivity measures should drive profit growth. Though Pfizer does not expect strong top-line growth over the next three years due to the LOEs, it expects EPS growth.
Medicare Part D Changes to Hurt Other Drugmakers' Sales
In 2022, in the United States, Congress passed the IRA, which made significant changes to how drugs are covered and paid for under Medicare, including penalties for significant increases in the prices of drugs.
Among other measures, the IRA requires the U.S. Department of Health and Human Services to effectively set prices for certain single-source drugs and biologics reimbursed under Medicare Part B and Part D.
Similar to Pfizer, some other drugmakers like J&J JNJ, Amgen, Merck MRK and Eli Lilly LLY also expect an unfavorable impact of the Medicare Part D redesign on their top line. J&J expects Medicare Part D redesign to hurt sales of drugs like Stelara, Tremfya, Erleada and pulmonary arterial hypertension drugs. Merck and Lilly expect the government price setting to hurt sales of their diabetes drugs, Januvia/Janumet and Jardiance, respectively, in 2026. Amgen's Enbrel and Otezla have been selected for Medicare price setting beginning in 2026 and 2027, respectively.
PFE's Price Performance, Valuation and Estimates
Pfizer's stock has declined 6.2% so far this year compared with a decrease of 1.3% for the industry.
From a valuation standpoint, Pfizer appears attractive relative to the industry and is trading below its 5-year mean. Going by the price/earnings ratio, the company's shares currently trade at 7.82 forward earnings, lower than 14.81 for the industry and the stock's 5-year mean of 10.89.
The Zacks Consensus Estimate for 2025 earnings has risen from $2.99 per share to $3.06 per share, while that for 2026 has gone up from $3.02 to $3.09 per share over the past 60 days.
Pfizer has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Johnson & Johnson (JNJ): Free Stock Analysis Report
Pfizer Inc. (PFE): Free Stock Analysis Report
Merck & Co., Inc. (MRK): Free Stock Analysis Report
Eli Lilly and Company (LLY): Free Stock Analysis Report
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
an hour ago
- Globe and Mail
Warren Buffett-led Berkshire Hathaway Has 22% of Its $290 Billion Portfolio Invested in 1 Stock That's Up 749% in 9 Years
Key Points Warren Buffett has an unrivaled track record allocating capital, but maybe the best dollar gain occurred with a decision made just in the past decade. This business, which remains Berkshire's top holding, has numerous traits showcasing its high quality. Investors shouldn't blindly follow Buffett. 10 stocks we like better than Apple › Since 1965, Berkshire Hathaway has compounded shareholder capital at a nearly 20% annualized rate. That unbelievable performance was under the stewardship of Warren Buffett, arguably the best investor ever. The Oracle of Omaha's most lucrative idea might have happened in the past decade, though. Shares of this consumer-facing enterprise have soared 749% in the last nine years (as of July 15), producing a huge dollar gain for Berkshire. Despite numerous stock sales over a four-quarter stretch from the fourth quarter of 2023 through the third quarter of 2024, this company still represents 22% of the conglomerate's $290 billion portfolio, making it the biggest position. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » This is a wonderful business, but should investors buy the stock? Passing Buffett's filter is a valuable endorsement During the first quarter of 2016, Buffett and Berkshire initiated a position in Apple (NASDAQ: AAPL). Based on the percentage return mentioned above, this turned out to be an investing masterstroke. Looking back at the decision, investors can gain valuable insights as to how Apple passed Buffett's filter. Berkshire's portfolio is full of businesses that possess strong brands. There might be none more powerful than Apple, which has a global customer base that's loyal to the company's products and services, constantly waiting for what will be launched next. Apple positions itself at the premium end of the consumer electronics industry, but its intense focus on innovation has won over consumers. This also allows for pricing power, a trait that Buffett loves. Apple's share of the smartphone industry's profits is significantly higher than its share of unit sales, which reveals the financial success of the iPhone. Buffett likes to own companies in pristine financial shape. Apple generates copious amounts of free cash flow each quarter. And in the past five years, the operating margin has averaged a breathtaking 30%. Of course, a great company doesn't always make for a worthwhile investment opportunity. Here's where valuation comes into focus. During the first quarter of 2016, Apple shares traded at an average price-to-earnings (P/E) ratio of 10.6. Viewing this multiple with the company's brand, pricing power, and profits, buying Apple more than nine years ago looks like a no-brainer decision for Buffett with the benefit of hindsight. Is Apple stock a buy now? As of March 31, Berkshire Hathaway owned 300 million Apple shares. If Buffett and his team weren't still bullish on Apple, then they wouldn't have such a huge position in the stock. But should individual investors buy shares now? To come to an informed answer requires a fresh perspective. Some of the favorable traits still hold true, like the powerful brand and the monster profits. However, there's reason to believe that this " Magnificent Seven" stock will struggle to outperform the market over the next five or 10 years. Apple's growth is nothing to write home about. The analyst community sees revenue increasing at a compound annual rate of 5.3% between fiscal 2024 and fiscal 2027. Apple's lack of progress with artificial intelligence (AI) initiatives also continues to receive criticism. Updates to the Siri voice assistant that integrate AI aren't coming until next year. And Apple has relied on partnerships to bring AI capabilities to its operating system. At the end of the day, these aren't driving meaningful growth. Investors also certainly won't be pleased with the fact that the stock currently trades at a P/E ratio of 32.9. At a valuation three times what Buffett first paid, Apple stock isn't a buy right now. Should you invest $1,000 in Apple right now? Before you buy stock in Apple, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025
Globe and Mail
an hour ago
- Globe and Mail
5 Artificial Intelligence (AI) Infrastructure Stocks Powering the Next Wave of Innovation
Key Points Nvidia's AI data center chips remain the gold standard. Amazon and Microsoft have been significant winners in AI due to their massive cloud infrastructure operations. Arista Networks and Broadcom have tremendous growth ahead in AI networking. 10 stocks we like better than Nvidia › It will be a massive undertaking to build out the hardware and support necessary to power increasingly advanced artificial intelligence and provide it at a global level where billions of people can access it. According to research by McKinsey & Company, the world's technology needs will require $6.7 trillion in data center spending by 2030. Of that, $5 trillion will be due to the rising processing power demands of artificial intelligence (AI). These investments, though, will lay the groundwork for the next era of global innovation, which will revolutionize existing industries and create new ones. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Some key companies have already been experiencing significant growth due to the AI trend, and there is still likely a long runway ahead for players in key AI infrastructure spaces, including semiconductors, cloud computing, and networking. Here are five top stocks to buy and hold for the next wave of AI innovation. Nvidia: The data center AI chip leader Inside these colossal AI data centers are many thousands of AI accelerator chips, usually from Nvidia (NASDAQ: NVDA). The company's graphics processing units (GPUs) are the only ones that can make use of its proprietary CUDA platform, which contains an array of tools and libraries to help developers build and deploy applications that use the hardware efficiently. CUDA's effectiveness -- and its popularity with developers -- has helped Nvidia win an estimated 92% share of the data center GPU market. The company has maintained its winning position as it progressed from its previous Hopper architecture to its current Blackwell chips, and it expects to launch its next-generation architecture, with a CPU called Vera and a GPU called Rubin, next year. Analysts expect Nvidia's revenue to grow to $200 billion this year and $251 billion in 2026. Amazon and Microsoft: Winning in AI through the cloud AI software is primarily trained and powered through large cloud data centers, making the leading cloud infrastructure companies vital pieces of the equation. They're also Nvidia's largest customers. Amazon (NASDAQ: AMZN) Web Services (AWS) has long been the world's leading cloud platform, with about 30% of the cloud infrastructure market the cloud, companies can access and deploy AI agents, models, and other software throughout their businesses. AWS's sales grew by 17% year over year in Q1, and it should maintain a similar pace. Goldman Sachs estimates that AI demand will drive cloud computing sales industrywide to $2 trillion by 2030. Amazon will capture a significant portion of that, and since AWS is Amazon's primary profit center, the company's bottom line should also thrive. It's a similar theme for Microsoft (NASDAQ: MSFT). Its Azure is the world's second-largest cloud platform, with a market share of approximately 21%. Microsoft stands out from the pack for its deep ties with millions of corporate clients. Businesses rely on Microsoft's range of hardware and software products, including its enterprise software, the Windows operating system, and productivity applications such as Outlook and Excel. Microsoft's vast ecosystem creates sticky revenue streams and provides it with an enormous customer base to cross-sell its AI products and services to. Microsoft has also invested in OpenAI, the developer behind ChatGPT, and works with it extensively, although that relationship has become somewhat strained as OpenAI has grown increasingly successful. Regardless, Microsoft's massive footprint across the AI and broader tech space makes it a no-brainer. Arista Networks and Broadcom: The networking tech that underpins AI Within data centers, huge clusters of AI chips must communicate and work together, which requires them to transfer massive amounts of data at extremely high speeds. Arista Networks (NYSE: ANET) sells high-end networking switches and software that help accomplish this. The company has already thrived in this golden age of data centers, with top clients including Microsoft and Meta Platforms, which happen to also be among the highest spenders on AI infrastructure. Arista Networks will likely continue benefiting from growth in AI investments, as these increasingly powerful AI models consume ever-increasing amounts of data. Analysts expect Arista Networks to generate $8.4 billion in sales this year (versus $7 billion last year), then $9.9 billion next year, with nearly 19% annualized long-term earnings growth. Tightly woven into this same theme is Broadcom (NASDAQ: AVGO), which specializes in designing semiconductors used for networking applications. For example, Arista Networks utilizes Broadcom's Tomahawk and Jericho silicon in the networking switches it builds for data centers. Broadcom's AI-related semiconductor sales increased by 46% year-over-year in the second quarter. Looking further out, Broadcom is becoming a more prominent role player in AI infrastructure. It has designed custom accelerator chips (XPUs) for AI model training and inference. It has struck partnerships with at least three AI customers that management believes will each deploy clusters of 1 million accelerator chips by 2027. Broadcom's red-hot AI momentum has analysts estimating the company will grow earnings by an average of 23% annually over the next three to five years. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Arista Networks, Goldman Sachs Group, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Globe and Mail
an hour ago
- Globe and Mail
Can Shiba Inu Reach $1 in 2030?
Key Points Despite extreme levels of volatility, Shiba Inu's price has rocketed higher since its launch in 2020. The token's price is driven by short-lived hype cycles, which are impossible to predict. If Shiba Inu gets to $1 at the current token supply, the numbers are hard to wrap your head around. 10 stocks we like better than Shiba Inu › The entire cryptocurrency market is worth $3.8 trillion, as of this writing on the morning of July 16. Despite that scale, critics rightfully view the industry with a bit of skepticism. Several crypto scams still exist, and crypto's utility is questioned by many. However, some tokens have emerged as huge winners for risk-seeking investors, thanks to their ability to draw a large community of supporters. This is exactly what Shiba Inu (CRYPTO: SHIB) has done. It's trading 84% below its peak but has still skyrocketed since its launch in 2020. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Maybe the momentum will continue through the rest of this decade. Can Shiba Inu reach $1 per token in 2030? Hype and speculation Shiba Inu's historical price chart resembles a roller-coaster ride because there have been short periods of massive price upswings. This happened in late 2021, when Shiba Inu's price hit a record in October that year during a raging bull market. It also occurred twice in 2024, but the price tanked in the months that followed as the demand wasn't sustainable. This tells me that the token's price is influenced by short-term hype cycles. Those who can correctly time these, buying and selling at the right moments, will see big gains. But that's impossible to do consistently without a tremendous amount of luck. Shiba Inu's path to $1 Shiba Inu's token currently trades at $0.0000139. For the price to reach $1 in five years, it would need to rise 72,000-fold. This translates to a monster compound annual growth rate of 836%. In comparison, Bitcoin, the world's most valuable digital asset, has seen its price increase at a yearly clip of 67% in the past five years. There are 590 trillion Shiba Inu tokens in circulation. Keeping the supply constant, this implies an illogical $590 trillion market cap at the end of the decade. The U.S. economy, which is the largest in the world, reported an annualized gross domestic product (GDP) of $30 trillion in Q1 2025. Nvidia, the most valuable company on Earth and the champion of the artificial intelligence (AI) race, has a market cap of over $4 trillion. It's not realistic for Shiba Inu to reach $1 per token at the current supply. However, the network is trying to improve the situation. Shiba Inu is in the process of burning coins. This could introduce an element of scarcity that might drive interest. The current pace of this activity won't put a meaningful dent in the supply, as only 180,000 coins were burned in the past 24 hours. Even if the token supply were reduced significantly to help the price grow, the entire network wouldn't necessarily be worth more. Holders would simply have fewer tokens that have a higher nominal price. Hanging on The fact that Shiba Inu trades 84% below its peak indicates the market's waning interest. Yes, there will likely be random occurrences when the price spikes, only to come crashing back down. Unless there are real-world use cases that support broad user and developer adoption, I think Shiba Inu will likely just hang on and survive in the years ahead. The supporters will point to things like the layer-2 Shibarium that's meant to lower fees and speed transaction times. There's also ShibaSwap, a decentralized exchange, and a metaverse. However, I don't see any value here. Making things more difficult is the competition Shiba Inu faces. There are so many tokens out there that speculators can play with and some are surely more volatile. For those true investors seeking a safer long-term opportunity in the crypto space, nothing beats Bitcoin. Should you invest $1,000 in Shiba Inu right now? Before you buy stock in Shiba Inu, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Shiba Inu wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025
