Pfizer's (PFE) risk-reward profile has become more balanced following recent share weakness, with the stock's decline bringing valuations closer to long-term averages and reducing downside concerns previously highlighted in its outlook, RBC Capital Markets said in a note Tuesday.
The brokerage pointed to Pfizer's dividend yield of about 7% as a key support factor for the stock, saying it may provide a "floor" for downside as income-focused investors step in, even as longer-term growth challenges remain.
RBC highlighted two late-stage pipeline catalysts, sigvotatug vedotin in non-squamous non-small cell lung cancer with an around 60% probability of success and roughly $1.2 billion peak sales potential, and mevro in metastatic castration-resistant prostate cancer with similar success odds and about $2.7 billion peak sales, with data expected in H2.
The company's strong Q1 results could lead to a full-year guidance upgrade, but RBC warned that Pfizer continues to face earnings transition risk from major patent expirations in 2027 to 2030, limiting visibility on a sustained return to growth, the report added.
RBC Capital Markets upgraded its rating on the stock to sector perform from underperform and reiterated a price target of $25.
Shares of Pfizer were down 0.3% in Wednesday trading.
Price: 25.62, Change: -0.08, Percent Change: -0.30
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