Pharma Stocks – Pfizer (PFE) Amid Market Volatility

The U.S. stock market has taken a sharp hit recently, with many attributing the decline to renewed fears of tariffs and trade tensions. Amid this volatility, I’ve been monitoring my holdings closely, particularly Pfizer (PFE), along with TLT, TLH, Occidental Petroleum (OXY), and Ready Capital (RC).

Market Recap:

• On a turbulent day for equities, defensive assets like U.S. Treasuries gained, with both TLT (20+ Year Treasuries) and TLH (10–20 Year Treasuries) rising, signaling a risk-off environment. These gains reflect investors’ move toward safety as uncertainty looms over trade and macroeconomic policy.

iShares 20+ Year Treasury Bond ETF (TLT)

iShares 10-20 Year Treasury Bond ETF (TLH)

• OXY plunged 11.01%, likely due to weakness in the energy sector, possibly tied to falling oil prices. This marks a sharp move and highlights how cyclical stocks can get hammered during broad market selloffs.

Occidental (OXY)

• RC dropped 4.70%, consistent with pressure on financials and real estate investment trusts (REITs) as interest rates remain a wildcard. High rates can squeeze margins and reduce the appeal of RC.

Ready Capital Corp (RC)

• Pfizer (PFE), meanwhile, dropped only 1.66%, showing relative strength compared to OXY and RC —and the broader market. This has sparked some thoughts on why PFE may be holding up better and where it might be headed.

Pfizer (PFE)

Why PFE May Be Holding Its Ground?

1. No Direct Tariff Impact (Yet): With Trump recently reigniting tariff talk, markets are pricing in potential global trade disruptions. However, pharmaceuticals were not named in any major way, sparing drugmakers from immediate concerns. This may have shielded Pfizer from the worst of the news-driven declines—for now.

2. Defensive Sector Stability: Pharmaceuticals are part of the healthcare sector, which traditionally performs well during market downturns. People still need medicine, regardless of market conditions, making companies like PFE more recession-resilient.

3. Dividend Cushion: Pfizer's high dividend yield provides a steady income stream and helps attract long-term investors, especially during volatile times. That yield acts as a cushion against price declines and makes it appealing to income-focused investors.

Valuation & Technical Perspective:

• 52-Week Range: $24.28 – $31.54

• Current Price: Near the bottom of this range, suggesting possible undervaluation.

At these levels, Pfizer looks inexpensive on a historical basis, especially when considering its dividend yield and cash flow generation. This could present a value-buying opportunity, particularly for investors with a longer-term horizon.

Pfizer's forward P/E ratio is significantly lower than the S&P 500 average, which might indicate the market has priced in too much negativity—or perhaps underappreciates its future potential.

Upcoming Catalyst – Q1 Earnings (April 29, 2025):

Looking ahead, the next major driver for the stock will be Pfizer’s Q1 earnings, set to be released pre-market on April 29. Expectations may be subdued given the current macro backdrop and the company’s ongoing post-COVID adjustment.

Key things I’ll be watching:

• Guidance: Is management optimistic about revenue growth, especially in non-COVID therapeutics?

• Pipeline Updates: Are there new approvals, Phase III progress, or updates on key drug launches?

• Margins and Cost Control: How is Pfizer managing costs and R&D in a more challenging pricing environment?

A strong beat or positive guidance could be a catalyst for a rebound, while disappointing numbers may already be priced in given how low the stock is trading.

Long-Term View:

• Strong Balance Sheet: Pfizer maintains solid financials with enough flexibility to support R&D, dividends, and share buybacks.

• Robust Pipeline: Beyond COVID, Pfizer is investing heavily in oncology, immunology, and rare diseases—key areas for long-term growth.

• M&A Strategy: The company has been active in acquiring innovation (e.g., Seagen acquisition), adding potential growth drivers for the next decade.

• Global Demand: Healthcare needs are growing globally. Pfizer has the scale, partnerships, and portfolio to tap into international growth, especially in emerging markets.

Final Thoughts:

Pfizer might not be the flashiest stock in the market, but it has staying power. In the face of a broad selloff and macroeconomic uncertainty, its defensive profile, high dividend, and relative price stability are exactly why it remains a conviction holding for me.

The market may be punishing growth and high-beta names right now, but companies like Pfizer offer a compelling mix of value, income, and resilience—and could be well-positioned to outperform if volatility continues. I'm watching April 29 closely, but confident that PFE is on solid footing for the long haul.