Pfizer Beats Q4 Views as Covid Sales Fade; 2026 Guidance Disappoints
Analysts express caution despite strong non-Covid product performance and promising obesity drug results
Pfizer reported fourth-quarter earnings that beat analyst expectations on Tuesday, though the pharmaceutical giant painted a cautious picture for 2026 as sales from its Covid-19 products continue to fade.
The company reported revenues of $17.6 billion for the final quarter of 2025, a 1% decline from the prior year but exceeding Wall Street forecasts by $770 million. Adjusted earnings per share of 66 cents comfortably topped the 57-cent consensus estimate, marking a 15.8% beat. For the full year 2025, Pfizer delivered $62.6 billion in revenue, down 2% from 2024.
Despite the better-than-expected quarterly performance, investors expressed concern about the company's 2026 outlook. Pfizer reaffirmed guidance for revenue between $59.5 billion and $62.5 billion, representing a decline of 2% to 5% compared to 2025 results. The projection reflects an expected $1.5 billion reduction in Covid-19 product sales as the pandemic-driven demand that once powered Pfizer's growth continues to subside.
"While Pfizer surpassed Q4 earnings and revenue expectations, there is skepticism regarding the company's ability to sustain earnings power," analysts noted, pointing to anticipated declines in Covid-19 product revenues and the impact of products losing exclusivity. Prior to the earnings release, analyst estimates for Pfizer's 2026 earnings had already fallen from $3.15 to $2.99 per share over the preceding 60 days.
Beneath the headline numbers, Pfizer's core business showed encouraging momentum. Non-Covid products grew 6% operationally during the quarter, driven by strong performance from several key franchises. The company's RSV vaccine Abrysvo demonstrated 58-63% efficacy in older adults and 68-72% protection against infant RSV hospitalization when administered to pregnant individuals. Oncology sales, which now represent approximately 28% of total revenues, rose 11% in the second quarter of 2025 and continue to be a significant growth driver following the Seagen acquisition.
In a potentially significant development for the company's long-term prospects, Pfizer reported positive topline results from its Phase 2b VESPER-3 study for PF-08653944, an injectable GLP-1 receptor agonist for obesity treatment. The study achieved its primary endpoint, showing a statistically significant weight reduction of up to 12.3% mean placebo-adjusted weight loss at 28 weeks. Notably, the drug demonstrated continued weight loss even after participants transitioned from weekly to monthly dosing at week 12, with no plateau observed by week 28. Pfizer plans to initiate an extensive clinical development program in 2026, including 10 Phase 3 trials for the candidate.
The obesity drug results come at a critical time for Pfizer, which has lagged behind competitors like Eli Lilly and Novo Nordisk in the lucrative GLP-1 weight-loss market. The company previously discontinued development of its twice-daily oral GLP-1 candidate danuglipron due to high discontinuation rates from gastrointestinal side effects, making the monthly injectable approach an important strategic pivot.
Beyond the Covid headwind, Pfizer faces several challenges in 2026. The company is approaching significant patent cliffs for key drugs including Ibrance (2027), Eliquis, and Vyndaqel (2028), which together pose a threat of revenue decline in coming years. Additionally, higher manufacturer discounts due to the Medicare Part D redesign under the Inflation Reduction Act are expected to negatively impact Eliquis's U.S. revenues in both 2025 and 2026.
Despite these challenges, Pfizer remains an attractive proposition for income-focused investors. The stock currently offers a dividend yield of approximately 6.5%, with the next quarterly payment of 43 cents per share scheduled for March 6, 2026. However, analysts have noted that the dividend payout ratio sits around 100% of current earnings, raising questions about the sustainability of dividend growth unless earnings improve significantly. The payout ratio is projected to fall to a more sustainable 56.8% next year based on earnings estimates.
Analyst sentiment on Pfizer remains mixed but leans positive. Based on ratings from 30 analysts covering the stock, Pfizer holds a "buy" consensus rating, with 43% recommending buy or strong buy and 53% rating the shares a hold. The average 12-month price target of approximately $28.85 suggests modest upside from current levels, though targets range from a low of $23 to a high of $37.54. Morgan Stanley reduced its price target from $32 to $28 in December with an "equal weight" rating, while Guggenheim has maintained a "buy" rating.
Pfizer shares traded around $26.66 following the earnings release, giving the company a market capitalization of $150.3 billion. The stock has a forward price-to-earnings ratio of 8.67, suggesting the market is pricing in considerable challenges ahead. As 2026 unfolds, investors will be watching closely whether Pfizer's diversification efforts across oncology, vaccines, and obesity drugs can successfully offset the ongoing decline in Covid-related revenue and navigate the approaching patent cliff.