Pfizer Stock Jumps After 2025 Revenue Outlook Offsets $1B Hit From Inflation Reduction Act Changes: Retail’s More Bullish

Shares of Pfizer Inc. climbed nearly 3% in premarket trading on Tuesday, poised to hit their highest level in a week. 

The rally followed the company’s release of its financial forecast for 2025, which includes revenue expectations of $61 billion to $64 billion, aligning with the FactSet consensus of $63.2 billion.

Pfizer said the projection reflects stable revenue from COVID-19 products, excluding approximately $1.2 billion of non-recurring revenue for Paxlovid in 2024. 

Adjusted earnings for 2025 are expected to range between $2.80 and $3.00 per share, versus analysts’ estimates of $2.86 per share.

The forecast accounts for a $1 billion year-over-year revenue hit tied to the Inflation Reduction Act (IRA), which redesigns the Medicare Part D benefit structure. 

Key changes include a $2,000 annual out-of-pocket cap and the new Prescription Payment Plan (favorable impact), the sunsetting of the Coverage Gap Discount Program, and new manufacturer discounts in coverage phases (unfavorable impact).

Pfizer expects 2025 adjusted Selling, Informational & Administrative (SI&A) expenses to range from $13.3 billion to $14.3 billion and R&D expenses to be between $10.7 billion and $11.7 billion, bringing total expenses to $24 billion to $26 billion. 

This includes $4 billion in operating expense savings achieved by the end of 2024 through a cost realignment program and an additional $500 million in savings anticipated in 2025.

Chairman and CEO Albert Bourla expressed optimism, stating, “As we look forward, we are confident in our future. With our clear strategic roadmap, a robust pipeline of potential innovative medicines and vaccines and a talented team laser-focused on execution, we believe we are on course to deliver significant shareholder value”

Pfizer reaffirmed its 2024 adjusted earnings guidance of $2.75 to $2.95 per share, on projected revenue of $61 billion to $64 billion, reinforcing confidence in its near-term outlook.

PFE sentiment and message volume Dec 17 premarket as of 8:15 am ET | source: Stocktwits

On Stocktwits, PFE was among the top five trending symbols before the bell, with retail sentiment climbing into more ‘bullish’ levels amid a jump in message volume.

One optimistic user hoped the stock would hit the $26 mark by the new year and regain $30 levels soon after.

Another remarked that Pfizer’s cost-cutting would increase their efficiency ahead of clinical trials for their latest pipeline additions.

Pfizer’s stock, which soared to around $59 in 2021 at the height of its COVID-19 vaccine success, has since plunged over 50% as pandemic-related revenues waned. 

Recently, activist investor Jeff Smith of Starboard Value, now holding a $1 billion stake, criticized Bourla’s strategies, citing overspending on acquisitions and weak R&D returns, which he claims erased $20 billion in value. 

The stock is down nearly 7% year-to-date and has a forward price-to-earnings (P/E) ratio of 10x. 

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