3 Reasons Pfizer Looks Like a No-Brainer Buy Right Now

If you're looking for an undervalued growth stock to buy right now, Pfizer (NYSE: PFE) is an investment that should be near the top of your list. While the company is facing a challenging road ahead, I'm optimistic that it can continue generating good growth with the investments and moves it has been making in recent years.

Investors may be down on the company, assuming that the business will be doomed as COVID-related sales decline and patents of key drugs expire. But that's likely far from the case. Here are three reasons why taking a chance on this struggling stock could potentially be a great move for you today.

Pfizer is working on a weight loss drug

Tech stocks have artificial intelligence (AI), but in healthcare, weight loss treatments are lighting a fire under companies' valuations. Pfizer hopes to benefit from that hype as it works feverishly on a weight loss pill it believes could be one of the first to hit the market soon. While there are approved weight loss injectable treatments in the market, such as Zepbound and Wegovy, there could be an even bigger opportunity for weight loss pills.

Pfizer has a pill it's developing called danuglipron, which is in early-stage trials but has demonstrated that it's well-tolerated and safe. The company abandoned a two-dose regimen of the drug due to side effects and, instead, it's moving forward with a daily dose.

In a phase 2b trial, the two-dose version helped people lose up to 13% of their body weight over a period of 32 weeks. Should the daily version achieve similar success without significant side effects, danuglipron has the potential to be a game changer for the business, as the obesity drug market could be worth $200 billion.

Its business is growing in multiple areas

What makes Pfizer a great investment is its diversity. That was on full display in its most recent earnings numbers, with Pfizer achieving strong growth in multiple areas. The company's revenue through the first nine months of 2024 was up 2%, totaling $45.9 billion.

That's impressive when you consider that Pfizer has experienced significant declines in COVID-19-related drug sales. Revenue from Comirnaty, its COVID vaccine, has fallen by 66% this year. But in specialty care, revenue has risen by 11%, and in oncology, the company received a boost from drugs it acquired from Seagen, and revenue is up by 25%.

Pfizer is still facing headwinds as it loses patent protection on key drugs in the years ahead, including Eliquis and Vyndaqel, but its diverse operations and focus on investing in growth opportunities puts it in a strong position to weather the storm.

A high yield and low valuation offer reasons to be patient

There's some uncertainty about how things will go for Pfizer in the future, but the reason to remain patient is the high dividend the healthcare stock offers investors right now. Pfizer's yield is around 6%, which is more than four times what you'd collect with the S&P 500 index, which yields 1.3%.

Plus, with the stock trading at a forward price-to-earnings multiple of 9, you're getting shares of Pizer at a steep discount. There's a good margin of safety there for investors, which can reduce the risk that comes with holding the stock amid such uncertainty.

Pfizer's low price may not last long

As Pfizer continues to deliver strong results and develops drugs in its pipeline, it could inevitably win over growth investors who may see it as too risky of an investment right now. When that happens, a rally could ensue as this struggling stock may be overdue for a strong bull run.

If you're willing to be patient, Pfizer can be one of the best stocks to hold in your portfolio right now.

Should you invest $1,000 in Pfizer right now?

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David Jagielski 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.