Pfizer Faces $1 Billion IRA Reform Hit As Analysts Expect Flat 2025 Outlook

Bank of America (BofA) Securities updated the earnings model for Pfizer Inc. (NYSE:PFE). The company will announce second-quarter 2025 earnings on August 5.

According to data from Benzinga Pro, analysts estimate adjusted earnings of 57 cents per share on sales of $13.41 billion.

In the second quarter, total revenue decreased by less than 1%, and earnings per share remained unchanged.

Analysts also expect revenue and EPS to stay within 1% of previous forecasts. Revenue will likely decline by a low single-digit percentage in the latter part of the 2020s, they say. This is mainly due to Vyndaqel and Ibrance’s earlier-than-expected loss of exclusivity.

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EPS is also expected to shift up or down by a low single-digit percentage, depending on the year.

BofA maintains the price forecast of $27 with a Neutral rating using a 9x P/E multiple on updated 2025 EPS.

Pfizer’s stock is trading at a price-to-earnings ratio of about 8–9 times its expected 2025 earnings. That’s lower than the peer average of around 12 times, excluding Eli Lilly & Co (NYSE:LLY).

It also offers a high dividend yield of around 7%, which may help prevent the share price from falling further. However, the long-term outlook is less certain due to upcoming patent expirations and increased competition, which could result in slower-than-average growth.

Pfizer expects its 2025 sales to decline by about $1 billion due to changes under the Inflation Reduction Act (IRA) Part D reform. The company anticipates a $500 million increase in revenue from more patients using its drugs, thanks to lower out-of-pocket costs. However, this is offset by a $1.5 billion loss due to increased costs in the catastrophic phase of Medicare Part D.

Cheaper options (i.e. Eliquis) may benefit from certain reforms more than expensive drugs because the coverage gap is being removed.

In the first quarter of 2025, Pfizer says it already felt a negative impact of around $650 million compared to the same period in 2024, due to higher discount requirements for drugmakers.

Price Action: PFE stock is down 0.64% at $25.49 at the last check on Monday.

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