3 Things You Need to Know If You Buy Pfizer Stock Today

As the old saying goes, "If something sounds too good to be true, it probably is."

That clichéd wisdom presents something of a problem for any investor eyeing a new stake in pharmaceutical outfit Pfizer (NYSE: PFE) while its stock is priced at less than 10 times this year's expected per-share profit of $2.98, with a forward-looking dividend yield that's unusually high at just over 6%.

What's the market seeing? Maybe it's what the market's not seeing. To this end, if you're thinking about diving in, here are the top three things you need to know about Pfizer today.

1. The real revenue turning point is 2030

All stock prices reflect that company's plausible future more so than its past, or even its present. The challenge for investors interested in Pfizer at this time is how far into the future they need to look.

While its acquisitions and in-house research and development work on this front are certainly promising, the company's goal of having eight new blockbuster oncology drugs on the market -- and doubling its total number of cancer patients it's currently serving as a result -- won't even begin to start happening until after 2028, and not in earnest until 2030.

image source: Getty Images.

Meanwhile, its top-selling drugs like cancer-fighting Ibrance, pneumonia vaccine Prevnar, and blood-thinner Eliquis (which accounts for about 15% of Pfizer's total revenue) will lose their patent protection. In other words, it could be a tough few years between now and 2030,

2. Its cost-cutting goals aggressive

At the same time, the drugmaker is setting up new profit centers to offset the eventual wind-down of others, and it's also cutting costs. Specifically, between this year and 2029, Pfizer expects to find $9.7 billion worth of operational savings. Most will come from cost realignments, but some will be the result of manufacturing optimization.

For perspective on that number, the company's on pace to do on the order of $62 billion worth of business this year. That's also more than all of last year's net income.

3. The high yield and low valuation make it worth the risk

Finally, although the stock's dirt cheap valuation and oddly high dividend yield suggest most investors doubt Pfizer will be able to achieve its goals anytime soon (and with a consensus 12-month price target of only $28.28 per share, most analysts seem to agree), this is a scenario where investors should think longer term, recognizing that Pfizer's forced overhaul isn't anything new or unusual for it or any other names in the pharmaceutical industry. It should be a far more promising company five years from now.

Also, remember that most stocks tend to move in anticipation of turnarounds, because they actually take hold. In this vein, Pfizer's got a great deal of drug-development progress news already lined up for the next five years, which will give investors plenty of bullish milestones to latch onto. Just make sure you're ready for a bumpy ride during this stretch.

James Brumley 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.