The booming stock market recently hit an all-time high. Many stocks regained all of their losses from earlier in the year and skyrocketed a lot higher. But Pfizer (PFE -0.11%) isn't one of them.

Shares of the big drugmaker are still down close to 5% year to date. That's a lot better than where Pfizer stock was in March, but 2020 so far is yet another dismal year. In 2019, Pfizer's shares fell 10% while the S&P 500 index soared nearly 29%. 

No investor likes mediocrity. And let's face it: Pfizer has been a mediocre stock at best. But here's why you should consider buying the big pharma stock anyway.

Businessman pointing to one of several lighted images of dollar signs

Image source: Getty Images.

Say goodbye to Upjohn and hello to stronger growth

What's the primary source for Pfizer's malaise? All you have to do is look at the company's second-quarter results.

Pfizer reported a 3% year-over-year organic revenue decline in Q2. This slide stemmed mainly from the Upjohn unit, which saw sales plunge 31% from the prior-year period. The loss of patent exclusivity for Lyrica was the major culprit. The good news for Pfizer is that it will soon say goodbye to Upjohn and hello to stronger growth.

Keep in mind that Pfizer's biopharma segment posted 6% year-over-year sales growth in the second quarter. And that's with the COVID-19 pandemic disrupting the company's business, especially in the U.S. market. 

Pfizer CEO Albert Bourla stated in the company's Q2 conference call that the company remains confident that it will be able to deliver annual revenue growth of at least 6% through 2025 after it spins off Upjohn and merges the unit with Mylan. This transaction is still on track to close in the fourth quarter of 2020.

The big drugmaker should also be able to achieve average annual earnings growth roughly in line with its projected revenue growth. Granted, 6% earnings growth might not seem all that exciting. But it should be enough to close to the middle of the pack in the S&P 500. 

Pfizer isn't in the middle of the pack, though, when it comes to dividends. The company is in the top quintile of S&P 500 stocks ranked on dividend yield. Its position shouldn't slip too much after the Upjohn-Mylan deal wraps up. Increased revenue and earnings growth combined with a strong dividend should make Pfizer stock more appealing than it's been in quite a while.

Near-term catalysts on the way

None of this is a secret. But what Pfizer needs to wake investors up to its soon-to-improve fortunes is a positive catalyst or two. The good news is that the company should have some catalysts on the way in the near term.

Pfizer plans to file for FDA approval in the third quarter for abrocitinib in treating atopic dermatitis. Abrocitinib's performance in phase 3 testing shows that it could be more effective than Regeneron's and Sanofi's blockbuster drug Dupixent. 

It seems likely that Pfizer could provide more good news related to its pipeline at the investor presentations scheduled for Sept. 14 and 15. But the biggest potential catalyst is the possibility of winning FDA emergency use authorization before the end of the year for BNT162b2, the COVID-19 vaccine candidate developed by Pfizer and BioNTech

Pfizer and BioNTech recently announced that they have enrolled over half of the targeted 30,000 patients for late-stage testing of BNT162b2. Bourla has publicly stated that he anticipates filing for FDA approval of the vaccine as early as October of this year.

Making mediocrity a memory

The fourth quarter of 2020 should be incredibly important for Pfizer. There's the Upjohn-Mylan close scheduled to wrap up. The potential filing for approval of BNT162b2 could be right around the corner.

But Pfizer doesn't have to win FDA approval of the vaccine to open the door for a huge amount of money to flow in: Its $1.95 billion supply deal with the U.S. government requires only emergency use authorization (EUA) from the FDA. That EUA could be on the way within the next three months. 

There could be plenty of good news in store for Pfizer soon. And the company just might be able to make its current mediocrity only a memory.