QS Research · Michael Burry's Scion Capital analyst template · 2006
PFIZER INC (PFE)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: LONG
Conviction medium · base case +30% · downside -9% · upside +83%
The market is capitalizing PFE on TTM GAAP net income of $4.03B and a 41.5x P/E, while the FY2020-FY2025 cycle produced average FCF of $15.29B (OCF $109.39B less capex $17.63B) against TTM FCF of $11.79B. At today's 7.0% FCF yield, normalized FCF supports $218.5B equity, +30.4% vs the $167.52B market cap; the section 13 FCF-yield sensitivities are $152.9B (-8.7%) on a 10% yield and $305.9B (+82.6%) on a 5% yield, with the 10%/5% re-rating tied to patent-expiry risk and cost-savings/obesity-pipeline catalysts rather than to valuation alone. The base is therefore normalized, not TTM: at the same 7.0% yield TTM FCF of $11.79B implies about $168.4B equity, roughly today's price. The 2026-11-03 guidance raise and the August 2026 insider cluster are non-valuation catalysts, but patent expiries, IRA/MFN pricing and the COVID tail are real. I am long with medium conviction; the cases are positively skewed but the downside case is still negative, so not high conviction.
Key numbers
- Share price: $29.39
- Market cap: $167.52B
- Latest financial period: TTM to Sep 27, 2026
- Revenue (TTM): $63.62B
- EV / EBITDA (TTM): 16.0x
- P/E (TTM): 41.5x
- Price / book: 1.88x
The 15 boxes
- ✓ 1. Long-form business notes
The filings show a genuinely cyclical revenue line: $41.65B in FY2020, a $101.17B peak in FY2022, a $59.55B trough in FY2023 (down -41% peak-to-trough) and $62.58B in FY2025, with operating cash flow swinging from $29.27B (FY2022) to $8.70B (FY2023) to $11.70B (FY2025) on capex of only $2.63B in FY2025. The FY2025 10-K describes a more concentrated, more policy-exposed business than FY2020: 12 products above $1B each made up 65% of total revenues (Eliquis alone 13%) versus 7 products at 53% in FY2020, and the company flags a significant revenue reduction from patent/exclusivity expiries in 2026 through 2030 plus IRA maximum-fair-price and MFN pricing. International was 41% of FY2025 total revenues (21% Europe, 12% China/Japan/APAC) versus 48% in FY2020, and FY2025 pre-tax income of $7.52B is far below FY2022's $34.73B, so the earnings base for valuation should be a mid-cycle average, not either extreme.
- ✓ 2. Competitive advantage
Pfizer's advantage is scale and a multi-billion-dollar R&D/pipeline budget, not pricing power or revenue durability: revenue went $101.17B in FY2022 to $59.55B in FY2023 and $62.58B in FY2025, and net income to common went $31.37B in FY2022 to $2.12B, $8.03B and $7.77B over FY2023-FY2025. The 10-K describes competition on efficacy, safety, tolerability, ease of use and cost, with generic and biosimilar competitors who can copy a product after patent loss and 'often charge much less'; Pfizer's own September 2025 U.S. government agreement concedes discounts up to 85% (50% on average) on most primary care brands. Cash generation is real and repeatable in scale terms (operating cash flow $11.70B against capex $2.63B in FY2025) but it is scale economics from a broad portfolio, not a durable moat around any single franchise. Verdict: narrow and eroding advantage; treat earnings as cyclical and normalize over the cycle.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue was $16.6B, flat vs Q3 2025, with non-COVID products +7% operationally while Paxlovid, Comirnaty and Prevnar fell. Reported diluted EPS was $0.56 vs $0.62 and adjusted EPS $0.87 vs $0.87; Q3 cost of sales fell to 24.3% of revenue from 25.0%, but first-nine-month cost of sales rose to 25.3% from 24.0%. Management raised FY2026 revenue guidance to $62.0–64.0B and adjusted EPS to $2.95–3.05, completed no buybacks in 2026, and the computed risk-factor diff shows 54 new/rewritten paragraphs.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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