Pfizer (PFE 0.45%) has a well-above-market dividend yield of 6.3%. Despite a payout ratio that is over 100%, the drugmaker states that it plans to maintain the dividend. But the real catalyst for a stock rally could come in June, when the company reports the results of testing for long-acting GLP-1 weight loss drug PF'3944. What should investors do?
Pfizer has fallen behind, for now
Pfizer has two notable problems. First, it faces patent cliffs in 2027 and 2028, when the drugs Ibrance, Eliquis, and Vyndaqel lose patent protection. Generic competition is likely to lead to dramatic revenue declines for these blockbuster drugs. On top of that, the pharmaceutical giant has fallen behind in the GLP-1 weight loss drug race.
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Novo Nordisk was first to market with a GLP-1 shot. Eli Lilly's shot quickly gained traction, taking the lead in the space. And Pfizer's internally developed GLP-1 drug was dropped because it didn't work as hoped. Now Novo Nordisk has introduced a pill form of its GLP-1 drug, with Eli Lilly working hard to get its own pill to market. Pfizer had to acquire another company to get back in the race.
The news out of Pfizer is encouraging
Pfizer's GLP-1 candidate, PF'3944, is advancing through clinical trials. The company plans to present data on the drug at the American Diabetes Association (ADA)'s Scientific Sessions in June. Pfizer's share price is already bouncing off the lows it hit in 2025. And if the data is as good as Pfizer seems to be suggesting, the update could prove to be a catalyst for further share price gains.
NYSE: PFE
Key Data Points
The big story, however, is that Pfizer's GLP-1 injection could be administered monthly. Currently, GLP-1 shots from Novo Nordisk and Eli Lilly require weekly injections. The new Novo Nordisk pill is taken daily. A GLP-1 drug that could be taken less frequently would likely be well received by consumers.
Getting back in the game
Good news from the ADA Scientific Sessions could put Pfizer back in the running as a play on GLP-1 weight loss drugs. However, even if this specific drug isn't the catalyst that management seeks, Pfizer has other drugs in development. Given its strong history of innovation, it is highly likely that Pfizer will not only survive but also thrive over the long term. For more aggressive income investors, buying before the June data release is probably a worthwhile risk/reward trade-off.
