Pfizer (NYSE: PFE) has been around for 175 years, selling a wide range of drugs in various treatment areas over time. But this pharma giant truly became a household name a few years ago. Pfizer made headlines with its coronavirus vaccine, which turned out to become the world's best-selling pharmaceutical product. And this helped Pfizer reach a record of more than $100 billion in annual revenue in 2022.

But over the past year and a half, as demand for the vaccine declined, so did Pfizer's revenue opportunity -- and upcoming patent expirations of other top-selling products have added to the company's woes. All of this has weighed on Pfizer's stock performance, leaving the shares down more than 30% over the past three years. Valuation has halved from a year ago, with Pfizer shares today trade for only 10 times forward earnings estimates. Does this dirt cheap price make Pfizer a buy right now -- or is the stock a value trap? Let's find out.

Stocks that look like a bargain, but...

First, a bit about value traps. They are stocks that look cheap according to valuation measures such as the forward P/E ratio, for example. But they actually aren't worth much more because of various problems like struggles to maintain profitability or a management team that has repeatedly made poor decisions. So, these particular stocks look like a bargain at current levels, but they really aren't -- and if you buy them, you're likely to regret it down the road.

Now, let's move along to Pfizer. The pharma giant surely faces some challenges right now. As mentioned, sales of its coronavirus vaccine and treatment have fallen from their peak, and it's highly unlikely they'll return to those levels. This has pushed Pfizer to launch a cost realignment program to ensure that expenses match the revenue opportunities ahead.

On top of this, Pfizer also faces key patent expirations of certain older products, and earlier estimated this will result in $17 billion in lost revenue from next year through 2030. Upcoming key losses of exclusivity include blood thinner Eliquis and breast cancer treatment Ibrance.

But Pfizer has planned ahead for this moment by focusing both on its in-house research and by making strategic acquisitions. Pfizer is just finishing up a record period of product launches -- commercializing 19 new products or indications in only 18 months. Looking ahead, the company predicts new product launches will add $20 billion to revenue in 2030 and its business deals will contribute $25 billion to revenue in that year.

Pfizer's oncology goals

Meanwhile, Pfizer has big hopes for its oncology business after the company's acquisition of Seagen -- a specialist in antibody drug conjugates. This technology uses the power of antibodies to deliver drugs directly to a tumor, maximizing efficacy and minimizing side effects. Pfizer has set a goal of delivering eight or more blockbuster oncology drugs by 2030 and doubling the number of cancer patients treated by its drugs.

How is all of this translating into the financial picture so far? In the second quarter, excluding the impact of coronavirus products, Pfizer's revenue climbed 14% on an operational basis. A number of products -- including prostate cancer medicine Xtandi, the Vyndaqel family for cardiomyopathy, and migraine drug Nurtec -- delivered double-digit growth.

The company also is making progress on its cost savings plan, saying it's on track to deliver at least $4 billion in savings by year end, and Pfizer launched a manufacturing cost optimization plan to generate $1.5 billion in savings by 2027.

Pfizer's recent moves even have helped it raise full-year revenue guidance to the range of $59.5 billion to $62.5 billion -- that's up from $58.5 billion to $61.5 billion.

Is Pfizer a deal today or a stock to avoid?

Now, let's return to our question. Considering all of these points -- the good and the bad -- is Pfizer a buy today or a value trap? Pfizer still has a way to go along its cost reduction path, and it will take time for new medicines to compensate for the loss of older blockbusters. The oncology business looks promising, but that, too, will take time to deliver major growth.

The key word here is "time" -- investors will have to be patient as the new growth drivers won't deliver results overnight. That said, Pfizer's new products and business deals are concrete elements that should transform earnings over the coming years. So, this company isn't a value trap and instead represents a buying opportunity for patient investors who want to benefit from this pharma company's new era of growth down the road.

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Adria Cimino 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.

Is Pfizer a Buy Right Now or a Value Trap? was originally published by The Motley Fool