Key Points
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Investors are downbeat on Pfizer, at least in part due to concerns about innovation and patent expirations.
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The company continues to invest in new drugs, but innovation can’t be scheduled.
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The company’s updated guidance for 2026 is good news, but Pfizer still has more work to do.
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Pfizer (NYSE: PFE) has a huge 5.8% dividend yield. That compares to roughly 1% for the broader market and 1.3% for the average pharmaceutical stock. Pfizer’s shares have fallen 50% from their 2021 high, even after rallying over 15% so far in 2026. That said, the company just increased its full-year 2026 revenue guidance by $1.5 billion, which could be a sign for more aggressive investors to jump on board. But risk-averse investors may want to wait a little longer; here’s why.
Pfizer has some problems to figure out
Pfizer traces its founding back to the mid-1800s. It has a proven history of success and is one of the most respected pharmaceutical companies on the planet. It was one of the few companies that quickly developed a COVID vaccine during the coronavirus pandemic, highlighting its technological capabilities. Given enough time, Pfizer is highly likely to get back on track as a business. This makes the current price attractive for risk-tolerant long-term investors.
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But the company is facing headwinds, which is why the stock has fallen so far and offers such a high yield. In fact, the stock is back below its level prior to the development of a COVID vaccine. This is a key part of the story, since the stock rose dramatically during the pandemic. The outsize profits from that period, thanks to the vaccine, have ended. And the company is now facing several large patent cliffs, with Eliquis expected to face generic competition in 2028 and Vyndamax in 2031.
Meanwhile, Pfizer had to drop a GLP-1 weight-loss drug it was working on in 2025. That was a black eye for the company and left it without a product in a highly attractive new product category. It pivoted quickly, buying a company with a more attractive GLP-1 pipeline before 2025 was over. But investor sentiment was severely damaged, and as of this writing, the company still hasn’t secured approval for a GLP-1 drug.
Pfizer isn’t a bad drug company
The point of that list of negatives is to show that Pfizer has been dealing with problems, and they aren’t over yet. The stock price is where it is, pushing the yield to an elevated level, for a reason. More conservative investors may want to wait for further progress in drug development before buying this giant healthcare stock. However, if you can handle a little uncertainty, it may be worth taking the risk.
Notably, the company just increased its full-year revenue guidance by $1.5 billion. It also upped its earnings outlook, stating that “The company’s guidance takes into consideration our strong year-to-date performance, continued confidence in our business and progress with ongoing cost improvement initiatives.” For investors, the real takeaway is that Pfizer’s turnaround effort is going better than management expected. And, perhaps more importantly, the worst-case scenario for 2026 was avoided.
Pfizer is making progress, but there’s more to do
The key story here is that Pfizer remains a well-run drugmaker. In fact, the headwinds it faces largely stem from typical issues in the pharmaceutical sector, since patent expirations and new drug development plans don’t always align perfectly. The period ahead is still going to be difficult, but if you think in decades, this high-yield stock could be an attractive option. In fact, even a 50% dividend cut, likely the worst-case scenario, noting that the dividend payout ratio is currently well above 100%, would still leave it with an above-average yield. You just have to go in recognizing that today’s progress doesn’t solve all of the company’s problems, even though it is clearly good news.
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Reuben Gregg Brewer 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.
