It's set to be a volatile week for stocks, against the backdrop of the U.S. presidential election and the November Fed meeting. Investors seeking relative stability have shown renewed interest in safe-haven assets like gold (GCZ24) - but shouldn't overlook the long-term upside in undervalued stocks from traditionally defensive sectors, either. With the world's population rapidly aging, the healthcare and pharmaceutical sector in particular holds some appeal, especially for investors in search of a stable source of income through regular dividends.

Taking this into account, let's take a look at one high-yielding pharma giant that just beat on earnings, and trades more than 50% below its highs. Let's dive in.

About Pfizer Stock

Founded in 1849 and based out of New York City, Pfizer (PFE) is one of the foremost names when it comes to pharmaceuticals globally. As one of the world's leading biopharmaceutical companies, Pfizer discovers, develops, manufactures, and markets medicines and vaccines for a wide range of diseases, including infectious diseases, cancer, cardiovascular disease, and rare diseases. The company's market cap currently stands at $159.1 billion.

Shares of Pfizer have struggled with sliding revenues in the post-COVID era, attracting the attention of activist investor Starboard Value - which has questioned Pfizer’s returns from a string of recent acquisitions it made after receiving a windfall in sales from its Comirnaty vaccine and Paxlovid treatment during the pandemic.

PFE has underperformed significantly from its pandemic-era peak, down more than 54% from its November 2021 highs. The stock is down 11.2% over the past 52 weeks, lagging the broader S&P 500 Index ($SPX) by a wide margin. That coincides with a sharp downturn in revenues for Pfizer, as well.

At its current levels, PFE stock offers a dividend yield of 5.98%, based on its current quarterly payout of $0.42 per share. The company has been raising dividends consistently for well over a decade, reflecting Pfizer's commitment to shareholder returns.

Plus, after its latest quarterly report, the fundamental picture for Pfizer is also starting to look a little brighter.

Blowout Q3 Results

In last Tuesday's earnings report, Pfizer's beat Wall Street's third-quarter expectations, and also raised its guidance for the full year. Revenues for Q3 came in at $17.7 billion, up 32% from the previous year, with the core Global Biopharmaceuticals Business notching 32% growth to $17.4 billion. Sales of Paxlovid spiked to $2.7 billion, spurred by a a one-time delivery to the U.S. Strategic National Stockpile, while the Seagen acquisition added $854 million to the top line.

Net income totaled $0.78 per share, or $1.06 on an adjusted basis, which came in well ahead of the consensus estimate for EPS of $0.61. This marked the fourth consecutive quarterly earnings beat from the company.

Pfizer also increased its revenue and earnings outlook for 2024, and now expects to report revenues between $61 billion and $64 billion for the fiscal year, compared to $59.5 billion and $62.5 billion earlier. Similarly, EPS guidance was raised to a range between $2.75 and $2.95, up from the previous range of $2.45 to $2.65.

What's Driving Growth at Pfizer?

While Starboard has been unimpressed with the company's post-pandemic trajectory, Pfizer’s portfolio reflects a well-diversified pipeline with significant growth potential across various medical categories, including oncology, weight loss drugs, and primary care treatments. With 108 candidates currently in its pipeline—30 of which are in Phase 3—the company is positioned for potential advancements in the near and medium term, providing attractive opportunities for growth-focused investors.

In oncology, Pfizer’s Mektovi and Braftovi combination therapy, along with Padcev and Adcetris, underscores its commitment to cancer treatment innovation. The combination of Braftovi and Mektovi has already received approvals in the U.S. and Europe for metastatic non-small cell lung cancer (NSCLC) and unresectable/metastatic melanoma. In October 2023, the combination therapy was also approved for NSCLC patients with a BRAF V600E mutation, marking a quick regulatory turnaround. Additionally, Pfizer’s Braftovi combined with Erbitux is now approved for metastatic colorectal cancer. Meanwhile, Padcev, developed in partnership with Merck (MRK), is gaining traction due to its efficacy in treating advanced solid tumors, especially bladder cancer.

Pfizer is also venturing into the weight-loss market, with Danuglipron as its second oral treatment candidate for obesity. This pipeline diversification highlights the company’s commitment to tapping into high-demand therapeutic areas.

The pharma giant is tapping into artificial intelligence (AI) initiatives to further strengthen its R&D capabilities. The success of AI-driven development in Paxlovid clinical trials has led the company to incorporate AI in over half of its clinical trials. AI applications have reduced data analysis time by 50%, enhancing trial efficiency and setting a foundation for Pfizer to accelerate future drug development.

On the primary care front, Nurtec ODT/Vydura (rimegepant), approved for migraine treatment and prevention, continues to see robust demand, with a notable 44.6% year-over-year revenue increase in Q3 2024. This growth, particularly strong in the U.S., Canada, and Europe, reinforces Pfizer’s established market position in primary care.

Pfizer’s strategic initiatives, combined with its AI-driven efficiencies and robust drug pipeline, bolster its revenue outlook and position it as a leader in innovation across high-demand sectors in healthcare.

Pfizer Could Be a Solid Value Buy

Overall, analysts remain optimistic about Pfizer stock, which has a consensus rating of “Moderate Buy,” with a mean target price of $32.75. This denotes an upside potential of about 15.4% from Monday's close. Out of 22 analysts covering the stock, 9 have a “Strong Buy” rating and 13 have a “Hold” rating.

Priced at less than 10 times forward earnings and 2.55 times sales, PFE looks like an attractively valued dividend stock to scoop up now.