3 Reasons Pfizer Stock Could Be a Steal of a Deal in 2025

If you're looking for reasonably priced stocks to pick up right now, you shouldn't overlook Pfizer (PFE -0.50%). The pharmaceutical giant isn't as risky an investment as it may appear to be. Its financials aren't in bad shape, and while the stock has been struggling, now could make a great time to load up on it.

Here are three reasons why Pfizer could prove to be a steal of a deal this year.

1. It's trading at an incredibly low earnings multiple

Buying quality stocks at decent valuations can give you a good margin of safety and minimize your investment risk. And while many stocks trade at cheap valuations because they are highly risky, that isn't the case with Pfizer.

There is some uncertainty about the company's growth prospects, especially as patent protections on several important drugs in its portfolio will expire soon, but I don't believe the stock should be as heavily discounted as it is right now. The company is guiding for revenue of between $61 billion and $64 billion for 2025, which is comparable to how much it reported this past year ($63.6 billion).

While that range does suggest a modest decline on the top line is likely, the company is still investing in growth opportunities -- its growth days are by no means over.

Currently, the stock trades at a forward price-to-earnings (P/E) multiple of less than 9, based on analysts' expectations for the year ahead. By comparison, the average stock in the Health Care Select Sector SPDR Fund trades at a forward P/E of nearly 18, making Pfizer look like a deeply discounted stock today.

2. Its dividend can buffer investors' returns against market declines

The stock market is facing a lot of additional uncertainty this year due to President Trump's tariffs and trade wars. In times like these, investors may look for safety in the form of dividend income. At the current share price, Pfizer's dividend yields a mouthwatering 6.7%, so it could become a more popular option among income investors. That payout is well above the S&P 500's average yield of 1.4%.

Those dividend payments could help serve as a buffer if stock prices suffer amid challenges to the economy this year. While investors may be worried about the sustainability of the dividend, it doesn't look to be in any danger. In 2024, Pfizer generated free cash flow of $9.8 billion, which was more than the $9.5 billion it paid out in dividends.

3. The company looks to still be in acquisition mode

Pfizer previously told analysts and investors that it wanted to add $25 billion to its top line by 2030 via acquisitions and through its pipeline. CEO Albert Bourla says that the company has added about $20 billion thus far, with its acquisition of oncology company Seagen in 2023 contributing a big piece of that sum.

While another big deal like that may not be on the horizon, Bourla did say on the company's earnings call in February that "we are looking at more strategic opportunities right now, which will enhance pipeline in areas that we would like to play rather than near-term revenues."

By the sound of it, the company may be looking at more modestly sized acquisitions that could help ensure that Pfizer hits its revenue target. If that happens, that could be a catalyst that lifts the healthcare stock higher, as it might alleviate some concerns about the business.

It's a solid stock, but you'll likely need to be patient

Pfizer has been a cheap stock for a while, and barring some big development, it's likely that it'll take some time before it starts to rally again. The good news is that with meaningful acquisitions and stable financials, the stock looks to have a lot of upside potential. The market's view of the risks the business faces appears to be overblown.

So for investors who are willing to buy shares of Pfizer sooner rather than later, the payoff could be substantial, both from the potential share price gains and from the dividend income they could accumulate over the years.