Pfizer Stock Looks Undervalued Ahead of Q2 Earnings Release

The current price of Pfizer Inc. (PFE) stock stands at $24.23 in midday trading on Tuesday, July 29. Despite its recent decline from the March 7 high of $26.73, the stock appears to be undervalued based on various statistical measures.

Statistically Cheap

Historical price-to-earnings (P/E) ratio and analysts’ earnings per share (EPS) forecasts indicate that PFE stock is statistically cheap. Analysts project $3.01 EPS this year and $3.08 in 2026, with a range between $3.07 this year and $3.06 in 2026.

Barchart’s analyst survey suggests that the forward P/E multiple for PFE stock is around 8.0x (i.e., $24.23 / $3.03) for 2025 and 7.84x ($24.23 / $3.09) next year. This is well below its historical valuation average, which has been around 10.79x (Seeking Alpha) or 10.16x (Morningstar) over the last five years.

Price-Earnings Target

Using a 10.5x average forward multiple, we can forecast where PFE would trade if it reverts to its mean valuation:

• $3.03 EPS x 10.5 = $31.82
• $3.09 EPS x 10.5 = $32.45

The average target price is $32.13, which presents a potential upside of +32.6% from today’s price.

Dividend Yield Target

PFE’s average dividend yield is around 4.415%, based on historical data from Morningstar and Yahoo! Finance. Using this average yield, the stock should be worth +71% more:

• $1.72 / 0.0415 = $41.45

Analysts’ Target Prices

Twenty-four analysts have an average price target of $28.67 (Yahoo! Finance), while Barchart’s mean survey target is $27.81, and Stock Analysis reports an average price target of $29.92.

AnaChart.com tracks recent analyst recommendations and write-ups, reporting that 17 analysts have an average price target of $32.21. On average, these surveys show that analysts believe PFE stock is worth $29.65, which is potentially +22.3% higher than today’s price.

Summary Valuation

Using the three metrics mentioned earlier (P/E based target, Dividend Yield target, and Analysts’ targets), PFE stock looks deeply undervalued:

• P/E based target: $32.13
• Dividend Yield target: $41.45
• Analysts’ targets: $29.65

The average target price is $34.41, which represents a potential upside of +42% from today’s price.

Shorting OTM PFE Put Options for Income

One way to play this undervalued stock is to sell out-of-the-money (OTM) put options in nearby expiry periods. For example, the Aug. 29 expiration period shows an attractive yield on the $23.00 put option exercise price, which is 5% below today’s trading price.

The midpoing premium is 26 cents, offering a short-seller an immediate 1.13% yield (i.e., $0.26 / $23.00 = 0.0113). Even if PFE stock falls to $23.00, the investor has a breakeven point of $22.74, which is 6.3% below today’s price.

The delta ratio is low at just 24%, implying a low probability that the stock will fall to this strike price over the next month. This implies an expected return of over 3.3% over the next three months if this trade can be repeated.

Conclusion

Pfizer Inc. (PFE) stock appears to be undervalued based on various statistical measures, including its historical P/E ratio and analysts’ EPS forecasts. One way to play this undervalued stock is to sell out-of-the-money put options in nearby expiry periods, generating extra income while waiting for the stock to rebound.