Pfizer (PFE 2.40%) just knocked it out of the park with its first-quarter results. Its revenue soared 42% year over year and adjusted earnings per share skyrocketed 48%. The big drugmaker blew away analysts' estimates and significantly raised full-year revenue and earnings guidance.

You might think that Wall Street would have been enthusiastic about such a strong quarterly update. Nope. Pfizer's shares barely moved after the Q1 results were announced. Mizuho Securities analyst Vamil Divan even downgraded Pfizer stock from buy to neutral. 

Wall Street certainly appears to be worried about Pfizer despite its huge COVID-19 vaccine success. But why?

Man with hands on the top of his head and a worried expression looking at a laptop screen with the words Wall Street on a side of a building in the background.

Image source: Getty Images.

Looking to the future

There are two reasons behind some Wall Street analysts' cautious view of Pfizer. Both are connected to the uncertainty about Pfizer's future prospects.

The more near-term concern is that demand for COVID-19 vaccines might fall off dramatically once the pandemic is over. Analysts are reluctant to build models that assume Pfizer's tremendous revenue from its vaccine will continue beyond the next year or so.

It's also important to remember that Pfizer doesn't get to keep all of the sales that it records for the COVID-19 vaccine. The company splits gross profits equally with its partner, BioNTech

However, there's also a potential issue looking even further into Pfizer's future. Mizuho's Divan summed it up in his note to investors: "Cash flows from COVID-19 vaccine sales provide Pfizer with greater optionality, but we wait to see how Pfizer allocates that capital before assessing whether they have improved their 2026-2030 outlook."

Pfizer expects to deliver solid revenue and earnings growth through 2025, even without COVID-19 revenue included. However, the company doesn't talk much about how it might fare after then. The table below might explain why.


U.S. Basic Patent Expiration

Inlyta 2025
Xeljanz 2025
Prevnar 13 2026
Eliquis 2026
Ibrance 2027

2024 (or 2028 with a pending Patent Term Extension)

Xtandi 2027

Source: Pfizer 10-K filing.

In Pfizer's first quarter, several of the drugs listed above ranked among its biggest growth drivers (aside from its COVID-19 vaccine). With a patent cliff on the way, some on Wall Street are understandably nervous.

A different perspective

It might seem like all of Wall Street is skeptical about Pfizer based on the relatively muted performance of the big pharma stock. However, that's not really the case. Of the 22 analysts surveyed by Refinitiv, 12 of them rate the stock as either a buy or a strong buy. That's an increase from only seven analysts with such bullish views in April.

While there have been some concerns about the resilience of Pfizer's COVID-19 revenue, those concerns appear to be decreasing. Pfizer and BioNTech recently signed a deal with the European Union (EU) to supply 900 million doses of their COVID-19 vaccine through 2023, with an option to the EU to purchase another 900 million doses. Pfizer said in its Q1 update that it's in discussions with multiple countries about supply deals for beyond 2021.

The emergence of coronavirus variants seems likely to fuel vaccine demand well into the future. Pfizer CEO Albert Bourla stated in the company's Q1 conference call that the company believes "regular vaccinations" will be required beyond 2022 and 2023.

But what about that patent cliff? First, the expiration of a basic product patent doesn't always mean that exclusivity is immediately lost. Look for Pfizer to do everything it possibly can to retain market share for all of its drugs, including seeking to enforce other patents to retain exclusivity.

Don't forget Pfizer's pipeline. The company currently has 100 programs in clinical development, with 32 in late-stage testing or awaiting regulatory approval. It also trounces the industry averages in clinical-trial success rates.

Pfizer's COVID-19 vaccine will generate a lot of extra cash for the company, as well. One of the top ways that drugmakers have navigated through the loss of patent exclusivity in the past is through acquisitions. Pfizer should see its financial flexibility to make smart strategic deals improve over the next couple of years.

The Jerry McGuire solution

What will it take for Pfizer to convince analysts that its future really is a bright one? I suspect the solution is, in the words of Cuba Gooding Jr.'s character in Jerry McGuire, "Show me the money."

Pfizer projects that its COVID-19 vaccine will generate sales of $26 billion this year. If the company comes close to raking in that same amount in 2022 and the prospects of strong recurring revenue look good, my hunch is that Wall Street's worries will diminish considerably.