Is Pfizer Stock a Buy After This Win?

After years of lagging the market, has Pfizer (NYSE: PFE) finally found a spark? With unimpressive financial results and recent launches that have not generated enough sales to turn things around, the pharmaceutical giant is betting that solid pipeline development could finally allow it to bounce back. And recently, the drugmaker reported results from a clinical trial that had the market buzzing, sending Pfizer's shares up by about 3% on the heels of the news. Is this the beginning of a sustained run? Let's find out whether now is a good time to invest in the stock.

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A good result, with some caveats

On March 17, Pfizer announced that an investigational candidate, atirmociclib, performed well in a phase 2 study in patients with second-line metastatic breast cancer. The medicine, when combined with another breast cancer therapy called fulvestrant -- marketed as Faslodex -- significantly improved progression-free survival versus Faslodex alone, or another combo treatment.

Notably, atirmociclib has a different mechanism of action compared to the leading, established franchises in this niche of the oncology market. These phase 2 results provide evidence that Pfizer's approach could yield strong efficacy alongside manageable safety. But there are several things to keep in mind. First, this was a mid-stage trial. Pfizer will still have to ace phase 3 studies before it can hope to launch atirmociclib. The company did not even provide overall survival data (which matters for approval) for this study as it was, according to Pfizer, not yet mature enough.

Second, atirmociclib performed well in second-line breast cancer patients -- that is, after prior therapies had failed. However, Pfizer is prioritizing earlier lines of treatment with this medicine anyway, so these results' relevance to the company's eventual commercial approach isn't exactly one-to-one. Despite these caveats, though, it was an encouraging result for a company that desperately needs to make clinical and regulatory progress to rejuvenate its pipeline and improve its financial results.

Looking at the bigger picture

Pfizer has already reported several clinical trial wins in March, including two for products that have not yet been approved in the U.S. -- atirmociclib and tilrekimig, a potential medicine for eczema -- and another for Talzenna, an approved cancer medicine seeking label expansions. Meanwhile, management said it plans to start about 20 pivotal clinical trials this year, after kicking off 11 in 2025.

The company's oncology pipeline will be particularly active, as will its investigational weight management candidates. Over the next couple of years, Pfizer could see more major clinical wins that will jolt its stock price and, eventually, allow it to expand its lineup and boost top and bottom-line growth. And amid all that, Pfizer's shares look fairly valued, trading at 9.2x forward earnings, whereas the average healthcare stock trades at 16.9x forward earnings.

Pfizer stock isn't a buy just because of its recent phase 2 victory. Instead, the company's deep pipeline and reasonable valuation are what make it an attractive stock right now.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.