Pfizer (PFE 1.03%) recently experienced yet another setback. The drugmaker has been posting disappointing financial results for several years, and its latest quarterly update sent its stock price down about 4%. The market was concerned that revenue moved in the wrong direction in 2025, while growth in adjusted earnings per share (EPS) was modest. And to make matters worse, Pfizer's guidance for 2026 wasn't particularly strong.
Amid all that, it might seem weird to suggest that now is a great time to buy the stock. But there are some reasons to think so.
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Why there might be ample upside ahead
The market tends to reward pharmaceutical stocks aggressively during clinical development, often more than it does once they've made commercial progress with already-approved products. By the time a drugmaker launches a medicine likely to generate well over $1 billion in annual sales, that opportunity is often already figured into the stock price.
To be clear, that's not always the case; some medicines perform far better or worse than anticipated. But there does tend to be substantial upside as late-stage clinical-trial wins start rolling in.
That brings us to Pfizer, whose shares are down significantly over the past three years. The company will face more challenges over the next three years, notably due to key patent cliffs, including that of its anticoagulant Eliquis. However, it could also see significant pipeline activity over this period. And if that's positive, the stock could soar well before its most promising candidates generate billions of dollars in sales.
Pfizer expects progress across 20 pivotal clinical trials this year, including 10 for the portfolio of investigational weight management assets it gained from its acquisition of Metsera, and four for PF'4404, a promising investigational cancer medicine. These are potential blockbusters. Positive results across the board could jolt the stock this year and help Pfizer establish a strong foundation for future growth.
NYSE: PFE
Key Data Points
There is some risk, too
If this were an exact science and we could be certain that Pfizer's phase 3 studies would result in clinical wins, inevitably leading to regulatory approval, that would already be factored into the stock price. The uncertainty is what creates a massive upside opportunity -- but it also comes with a healthy dose of risk, as the company could fail to deliver. Even in that case, though, there are reasons to invest in the stock.
Pfizer's ability to grow its bottom line amid declining revenue, for instance, is noteworthy. It's done so thanks to cost-cutting initiatives that paid off.
Meanwhile, it's making progress with recently launched (and acquired) products, whose revenue grew by 14% year over year to $10.2 billion in 2025. That's still a small percentage of the company's total. But over time, with label expansions and as older drugs stop negatively affecting Pfizer's results, these newer products should eventually account for a larger share.
Lastly, Pfizer is an attractive dividend stock, with a juicy current yield of 6.7%. Long-term, income-seeking investors who initiate positions today might see significant upside from strong upcoming clinical development, along with consistent dividends.
