RBC Capital Markets has adjusted its view of Pfizer, raising the drugmaker to Sector Perform from Underperform while retaining a $25 price target. The change reflects a reassessment of risk after Pfizer shares fell about 11% from their 2026 peaks, a decline that the brokerage says has brought the stock's valuation closer to its prior expectations and reduced the downside risks it had emphasized earlier.
The bank highlighted several factors that support a more balanced risk-reward profile. RBC pointed to Pfizer's robust first-quarter performance as potentially supportive of a stronger 2026 outlook. Additionally, the company's dividend yield, which the brokerage describes as nearly 7%, is expected to provide a floor under the share price for income-sensitive investors.
With valuation more aligned to the firm's models, RBC said some of the market's concerns appear to be priced in. Specifically, the brokerage indicated that worries about revenue erosion and Pfizer's slower-moving obesity program have been largely reflected in the current share price.
Investor focus is turning to a pair of late-stage clinical programs that RBC identified as the most important near-term sentiment drivers. The first is sigvotatug vedotin, an oncology candidate targeting second-line lung cancer. The second is mevro, an EZH2 inhibitor under development for metastatic castration-resistant prostate cancer. RBC's forecasts assign peak sales of roughly $1.2 billion for sigvotatug vedotin and about $2.7 billion for mevro.
At the same time, RBC cautioned about Pfizer's ambitions in obesity. The brokerage described recent Phase 2 data for berobenatide as meeting modest expectations but falling short of demonstrating meaningful differentiation versus competing therapies. RBC warned that Phase 3 could introduce execution risks due to potentially more complicated dosing requirements and emphasized that significant new data related to the obesity program are unlikely to arrive before 2027 or 2028.
Despite the upgrade, RBC maintained a guarded stance on Pfizer's long-term growth prospects. The bank wrote that Pfizer still sits among the large pharmaceutical companies with the weakest long-term growth profiles, a view driven by the fact that several major products face patent expirations later this decade. RBC expects earnings growth will remain constrained by these loss-of-exclusivity headwinds and said it would need clearer visibility into post-2028 growth before adopting a more positive view.
RBC also highlighted potential upside from business-development activity. The brokerage referenced comments from Chief Executive Officer Albert Bourla suggesting Pfizer could consider acquisitions larger than $7 billion. However, RBC noted that investors remain divided on Pfizer's historical record of executing deals, implying that any material M&A would be closely scrutinized by the market.
Context for markets: The brokerage's reassessment touches the pharmaceutical and broader healthcare sectors, with implications for equities sensitive to valuation resets, dividend income strategies, and clinical trial catalysts. The stock's dividend and valuation correction may draw interest from income-focused investors while trial readouts and patent timelines will influence sentiment for biotech and pharma peers.
Bottom line: RBC's upgrade reflects a narrower gap between current price and the firm's expectations after Pfizer's pullback, supported by recent results and a high dividend yield. Prospective upside hinges largely on upcoming cancer candidates and clearer evidence of sustainable growth beyond expected patent expirations, while execution risks in obesity development and the timing of meaningful new data temper enthusiasm.