Is This a Sign Pfizer's Aggressive Growth Strategy Is Paying Off?

Did you know that from 2022 to 2025, Pfizer (NYSE: PFE)'s top line declined by a mammoth 38%? Its revenue fell from more than $101 billion when its COVID vaccine and pill were in high demand to less than $63 billion last year, as the company has been battling some sizable headwinds. Unsurprisingly, the stock has also taken a beating; in five years, it has declined by around 35%.

Pfizer has been working on ways to expand its growth prospects, as it faces even more challenges ahead as key products lose patent protection in the near future, which may further drive down revenue. The company has been loading up on acquisitions in recent years in an effort to build up its portfolio and strengthen its top line. Its latest quarterly results may suggest that the business is indeed going in the right direction.

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Revenue from acquired and recently launched products was up 22% in Q1

Pfizer released its first-quarter results on May 5, and the top line may have looked unimpressive, with revenue rising by just 2% year over year on an operational basis. But what was particularly encouraging for investors was the 22% operational growth that it generated from launched and acquired products. One of its most promising products is Padcev, a cancer treatment it acquired as part of its massive $43 billion purchase of Seagen in 2023. In Q1, Padcev's sales rose by 39% to $591 million, as it has established itself as one of the company's top oncology drugs.

The challenge, however, is that Eliquis and Ibrance remain among its top drugs, generating a combined $3.2 billion in revenue last quarter, and they are both facing patent cliffs in the near future. The company is in a race to make up for the inevitable loss in revenue from these and other key products. Otherwise, the business's top line may continue to shrink. While Pfizer has been making some decent progress with its new products, it still has a lot of work to do.

Should you take a chance on Pfizer's stock?

There's plenty of risk and uncertainty with Pfizer's stock these days, which is why investors have largely avoided it. It's up around just 4% this year, even with its valuation looking low -- it trades at a forward price-to-earnings multiple of just nine, based on analyst expectations. Investors are not loading up on it, likely worried that there may be worse results in the future.

If, however, you can stomach the uncertainty and risk, I think the stock has the potential to be a good long-term investment. Its valuation is extremely low, and there could be plenty of upside in the long run. Its recovery is by no means a sure thing, but this could be one of the more underrated healthcare stocks to buy right now.

David Jagielski, CPA 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.