Pfizer (PFE) Q4 2025 earnings review
Core Business Accelerates, Capital Allocation Stumbles
Pfizer's pivot is working, but the cleanup cost is high. While the non-COVID portfolio accelerated to 9% operational growth—driven by a breakout quarter for Abrysvo and Oncology—the bottom line was crushed by a massive $4.4 billion non-cash impairment charge on pipeline assets (Tukysa, Disitamab). Consequently, Reported EPS swung to a loss of $(0.29). Looking ahead, the 2026 guidance implies an earnings contraction (midpoint $2.90 vs $3.22 in FY25), signaling that the transition year extends into 2026.
🐂 Bull Case
Commercial execution is improving. Abrysvo sales surged 136% YoY to $481M in Q4, and the Oncology portfolio grew 9%, led by Padcev (+15%) and Lorbrena (+45%). These assets are successfully filling the revenue void left by legacy blockbusters.
Pfizer is leaner. Adjusted SI&A expenses fell 5% YoY in Q4. The company remains on track with its cost realignment program, which is crucial for protecting margins as the product mix shifts.
🐻 Bear Case
The $4.4 billion impairment charge is a red flag regarding past M&A and R&D quality. Writing down $1.6B on Disitamab and $820M on Tukysa suggests the Seagen/partnered assets are underperforming initial aggressive forecasts.
Despite 'reaffirming' guidance, the math is negative. FY26 Adjusted EPS guidance of $2.80-$3.00 is significantly below the $3.22 delivered in FY25, driven by a higher tax rate and ongoing LOE (Loss of Exclusivity) impacts.
⚖️ Verdict: ⚪
Neutral. The operational pivot away from COVID is successful (9% core growth is impressive), but the massive impairment charges raise serious questions about capital allocation efficiency. With FY26 earnings guided down YoY, the stock lacks an immediate catalyst.
Key Themes
Pipeline Impairments: A $4.4 Billion Hit
Management took a massive $4.4 billion non-cash charge due to 'updated long-range commercial forecasts.' The write-downs include $1.6B for Disitamab vedotin and $820M for Tukysa (acquired from Seagen). This signals that the acquired pipeline is not meeting the bullish expectations set during the deal-making spree.
Abrysvo Breakout
Accelerating. The RSV vaccine Abrysvo is gaining significant traction, growing 136% operationally YoY to $481M in Q4. Growth was driven by launch uptake in international markets and favorable net price/share in the U.S., despite a narrower ACIP recommendation for older adults.
Oncology Portfolio Strength
The Oncology segment grew 9% YoY. New launches are offsetting the Ibrance decline (-5%). Padcev (bladder cancer) grew 15% to $508M, and Lorbrena (lung cancer) surged 45% to $282M. Oncology Biosimilars also outperformed, jumping 76% to $369M.
COVID-19 Franchise Drag
Decelerating. The COVID collapse continues to distort the P&L. Paxlovid revenue fell 70% operationally to $218M, and Comirnaty fell 35% to $2.27B. While this was expected, the drag remains significant, pulling total company revenue down 1% despite core strength.
Inflation Reduction Act (IRA) Impact
The IRA Medicare Part D Redesign is showing its teeth. While volume demand for Eliquis and Vyndaqel remains strong, revenue growth is dampened by higher manufacturer discounts and the elimination of the coverage gap. Eliquis grew 8% globally but faced price headwinds in the U.S.
Other KPIs
Stable. Adjusted Cost of Sales was 28.9% of revenue vs 32.3% a year ago. The improvement is driven by favorable sales mix (less Comirnaty) and lower amortization, partially offset by FX headwinds.
Deteriorating. Significant jump from 18.9% in 24Q4. The full-year 2025 rate was 12.7%, but the 2026 guidance assumes ~15.0%, creating a structural headwind for EPS growth next year.
Guidance
Contracting. The midpoint ($61.0B) implies a 2.5% decline from FY25 actuals ($62.6B). Management cites ~$1.5B in Loss of Exclusivity (LOE) headwinds and stable COVID revenues (~$5B) as factors.
Decelerating. FY25 Actual was $3.22, so the guide implies a ~10% earnings decline at the midpoint ($2.90). Drivers include a higher tax rate (15% vs 12.7%) and LOE impacts, despite planned share buyback suspension.
Stable. Roughly flat compared to FY25 ($10.2B) and FY24 ($10.7B). Reflects the plan to start ~20 pivotal trials, balancing investment with the cost-cutting program.
Key Questions
Impairment Specifics
You recorded a $4.4 billion impairment charge, largely on Seagen and other recent pipeline assets. What specific data or market changes drove the drastic reduction in forecast for Tukysa and Disitamab vedotin so soon after acquisition?
2026 Earnings Bridge
2026 EPS guidance at the midpoint ($2.90) is down ~10% from 2025 actuals ($3.22). Beyond the tax rate increase, what are the primary headwinds causing this contraction despite your $4B+ cost savings program?
Abrysvo Durability
Abrysvo had a blowout Q4 (+136% growth). How much of this was one-time stocking or timing versus durable market share gains, specifically in the competitive older adult segment?
Capital Allocation
With the massive impairments signaling past capital allocation struggles, and the stock lingering, why is the guidance assuming *no* share repurchases in 2026 despite the dividend payout ratio improving?