Pfizer’s landmark deal with the U.S. government to cut prescription drug costs and align Medicaid prices with other developed countries has captured widespread attention. The agreement, which sparked a sharp rally in Pfizer’s stock, is shaking up expectations for the whole pharmaceutical sector.

This historic pricing deal arrives on the heels of several major headlines for Pfizer, from announcing a multibillion-dollar acquisition in the obesity drug space to a recent legal hearing regarding one of its long-standing products. Despite headline risk and recurring debates about the company’s growth prospects, investors clearly took the government agreement as a positive catalyst. Pfizer’s share price surged nearly 14% over two days after the announcement, signaling renewed optimism about its ability to defend margins and regain momentum. While the five-year total shareholder return remains slightly negative, this week’s rally reflects the market’s view that Pfizer is primed for a turnaround, and short-term momentum is building.

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But after such a sharp rebound, is Pfizer truly undervalued for long-term investors, or is all the upside now accounted for in its price? Is this the next great buying opportunity, or is the market already factoring in future growth?

Most Popular Narrative: 6% Undervalued

The most followed narrative on Pfizer values the stock higher than its recent closing price of $27.08, suggesting room for upside based on a fair value near $28.86. This view stands out due to its focus on catalysts beyond the impact of the government deal.

Robust expansion of Pfizer's late-stage pipeline, especially in oncology and rare diseases, with multiple high-potential launches and label expansions (for example, Elrexfio in multiple myeloma, SV in non-small cell lung cancer, advanced ADC portfolio, and pipeline vaccines), stands to drive sustained long-term revenue and earnings growth by addressing rising global demand for innovative therapies as the population ages.

What powers this bullish narrative? The secret lies in future pipelines, ambitious margin improvements, and a valuation framework that relies on shifting profit mixes. Want to know which financial assumptions tip the balance? Dive in for the surprising drivers that anchor this fair value.

Result: Fair Value of $28.86 (UNDERVALUED)

However, analysts caution that rising regulatory scrutiny and looming patent expirations could threaten Pfizer’s profitability and test the long-term growth outlook.

Build Your Own Pfizer Narrative

If you are looking for a fresh perspective or want to form your own insight, it is easy to create a personal narrative from the underlying data in just a few minutes. Do it your way

A great starting point for your Pfizer research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.