Is It Time to Dump Your Shares of Pfizer?

A few years ago, Pfizer (NYSE: PFE) represented the ideal pharmaceutical stock investment. The company, as leader in the coronavirus vaccine and treatment market, offered a great deal of growth, and thanks to its broad variety of products across indications and its commitment to dividend payments, offered investors safety too.

But in more recent times, the pharmaceutical giant has experienced its share of struggles. Demand for coronavirus vaccines and treatments dropped, some of Pfizer's older blockbusters approached patent expiration, and revenue declined. All of this has weighed on stock performance, leaving the shares down almost 50% over the past three years. Considering this, is it time to dump Pfizer? Let's find out.

Record high revenue

First, a quick summary of the Pfizer story since the early pandemic days. As mentioned, Pfizer's earnings exploded higher amid demand for its coronavirus products -- they helped annual revenue reach a record high of more than $100 billion back in 2022. At the same time, blockbusters like blood thinner Eliquis and breast cancer drug Ibrance also contributed significantly to revenue.

But as demand for coronavirus products declined in later pandemic stages and as Pfizer faced a patent cliff involving Eliquis, Ibrance, and other drugs, overall revenue slipped from its record level. In the most recent full year, revenue came in at about $63 billion.

It's important to note, though, that Pfizer has launched several efforts to turn things around and reignite growth -- and these moves are starting to bear fruit. The company launched a cost realignment plan and said it's set to deliver more than $7 billion in cost savings by 2027. Pfizer also has released several new drugs that it expects to compensate for the losses of older drugs in the coming years. For example, for non-coronavirus product launches through the first half of 2024, the company expects about $20 billion in 2030 revenue.

Buying Seagen

Pfizer also has set its sights on becoming a giant in oncology, and to support this, completed the acquisition of Seagen in 2023. Two of Seagen's products in the most recent quarter delivered double-digit growth, and Seagen's technology and pipeline offer Pfizer the opportunity to further expand its oncology portfolio.

Finally, Pfizer also has made a big move recently to enter a market that's seeing high demand and is forecast to reach a value of nearly $100 billion by the end of the decade. I'm talking about the obesity drug market. Pfizer aims to do this through the proposed acquisition of biotech Metsera, a company with a candidate in phase 2 development and other potential products in the pipeline.

In recent days, though, obesity drug leader Novo Nordisk made a bid for Metsera, a move that could represent a new challenge for Pfizer.

An "illusory" proposal

In a statement Pfizer said: "The proposal is illusory and cannot qualify as a superior proposal under Pfizer's agreement with Metsera, and Pfizer is prepared to pursue all legal avenues to enforce its rights under its agreement."

Though there's reason to believe Pfizer may prevail, the Novo Nordisk bid still represents an element of uncertainty -- and could weigh on Pfizer's stock performance in the near term. On top of this, Pfizer's transition to an improved cost structure and the growth of newer products is a gradual process, with results to come over a period of years. So, investors may not see a sharp increase in revenue overnight.

Now, let's return to our question: Considering all of this, is it time to dump your shares of Pfizer -- or is this stock one to hold onto for the long term? I vote for remaining patient and sticking with Pfizer for the years to come, and here's why. As mentioned, all of Pfizer's efforts will take some time to boost revenue in a meaningful way. The process has started, but new drugs and potential new products require a few years to build up momentum -- and this means that right now we're in the early days of Pfizer's new growth story.

Of course, the Novo Nordisk challenge or slower-than-expected revenue growth from a product, for example, could represent potential risks. But the overall picture remains bright, and at about 8x forward earnings estimates, Pfizer is reasonably priced to attract investors. All of this means it isn't time to dump your Pfizer stock but instead to hold on as this recovery story plays out.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.