Vitals in Check
In this edition of the Smart Investor newsletter, we spotlight a global biopharmaceutical leader emerging from its post-pandemic reset with renewed growth, policy clarity, and one of the strongest innovation pipelines in the industry. But first, let’s review the latest portfolio news and developments.
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Portfolio News and Updates
❖ JPMorgan Chase (JPM) reported net income of $14.4 billion for Q3 2025, a 12% year‑over‑year increase – roughly $1 billion more than what analysts anticipated – fueled by strong performance in its markets and investment banking divisions. Investment banking revenue climbed 17% to $2.6 billion, supported by a rebound in deal activity and underwriting, while client trading revenue jumped 25% to $8.94 billion on robust fixed‑income and equities results. JPM’s net interest income (NII) – one of the key profitability metrics for banks – came in at $24.1 billion, slightly above consensus. Total net revenue came in at $46.43 billion versus the consensus of $45.57 billion, while GAAP EPS of $5.07 smashed expectations of $4.85. Looking forward, the bank nudged up its full-year NII guidance about $95.8 billion, exceeding market expectations of $95.5 billion which aligned with the previous bank’s outlook. JPM now anticipates Q4 NII of around $25 billion, surpassing the analyst consensus of $24.5 billion.
In addition, the largest U.S. bank announced a landmark program called “the Security and Resiliency Initiative” – a 10-year, $1.5 trillion plan to finance and invest in industries critical to U.S. economic security and national resiliency. Under this plan, JPM will commit up to $10 billion in direct equity and venture capital investments targeting U.S. companies in supply chain, defense and aerospace, energy independence, and frontier technologies, including quantum and AI. The rest of the $1.5 trillion program covers money intended to be mobilized and facilitated over 10 years through a combination of financing, lending, advisory, and capital raising activities across these critical sectors, representing a 50% increase over JPMorgan’s prior $1 trillion decade-long target to support these industries. JPMorgan CEO Jamie Dimon said that “the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products and manufacturing.”
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❖ BlackRock’s (BLK) total revenues and earnings far surpassed analysts’ consensus in Q3. Adjusted EPS was reported at $11.55, topping estimates of $11.30. Revenue came in at $6.51 billion, more than a 25% increase year-over-year, driven by positive impact of markets, 8% YoY organic base fee growth, fees related to the GIP and HPS transactions, and higher technology services and subscription revenue.
The outperformance was driven by a surge in total net inflows, which reached a record $205 billion, with long-term investment funds attracting $171 billion – both above estimates. Assets under management also climbed to a record $13.46 trillion, up 17% year-over-year. The firm’s growth was supported by record intake in its iShares ETFs and increased contributions from private markets, systematic strategies, and cash products. The completed $12 billion purchase of HPS Investment Partners added $165 billion in client assets, bringing total alternative investments to $663 billion. Performance fees from private markets operations jumped roughly 33% to $516 million during the quarter. CEO Laurence Fink highlighted the firm’s expansion into technology, data analytics, and its public-private investment positioning as key drivers of this performance.
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❖ Broadcom (AVGO) saw a wave of analyst price-target upgrades once again, as the stock jumped on Monday following the announcement of a deal with the ChatGPT creator OpenAI, which is backed by Microsoft (MSFT). The companies revealed a multi-year strategic collaboration to co-develop and deploy 10 gigawatts of custom AI accelerators, with the deployment beginning in the second half of 2026 and the target of full completion by the end of 2029 across multiple data centers using Broadcom’s Ethernet and other connectivity solutions for scalable AI infrastructure. OpenAI will be responsible for designing the AI accelerators and systems, while AVGO will handle development and deployment.
While no deal amount was mentioned, Bank of America estimates it to be close to the earlier OpenAI-AMD deal, likely around the $15-$20 billion per GW. Additionally, BofA says that Broadcom’s prior $10 billion award announced during its last earnings call was not for OpenAI, but for a different customer – likely Anthropic, xAI or Apple, suggesting continued customer diversification. Mizuho analysts chimed these estimates, significantly raising AVGO’s revenue estimates for the next three years.
The Broadcom-OpenAI deal continues the trend that became apparent in recent months of increasing adoption of custom silicon solutions. While Nvidia and AMD currently dominate the GPU market for AI, such custom AI accelerators designed for specific workloads may begin to chip away at the share held by general-purpose GPUs in data centers, as companies deploying AI infrastructure seek specialized hardware for efficiency and performance gains.
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❖ Alphabet’s (GOOGL) Google has continued to gain AI altitude with several notable announcements drawing analyst attention. The company unveiled Gemini Enterprise, a full-stack AI suite that incorporates Google’s most advanced AI models directly into enterprise workflows, while leveraging Google Cloud’s infrastructure.
Additionally, Google announced a $9 billion investment through 2027 to expand its data center campus in Berkeley County, South Carolina, and continue constructing two new data center sites in Dorchester County. At the same time, the tech giant announced plans to invest $15 billion over five years to build its largest AI and cloud data hub outside the U.S., located in India. The project includes a purpose-built 1 GW data center campus and will be part of Google’s global AI center network across 12 countries.
In parallel, Oracle (ORCL) and Google Cloud have announced the general availability of three new AI-enhanced database services as part of Oracle Database@Google Cloud, enhancing Oracle and Google Cloud’s joint offering for AI-driven database workloads with additional regional access and partner program support to accelerate IT modernization and innovation on a global scale.
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❖ Oracle (ORCL) has also recently made several notable announcements. The company announced a strategic partnership with Zoom Communications, enabling Zoom’s customer experience platform (Zoom CX) to run on Oracle Cloud Infrastructure (OCI). Oracle has also revealed that OCI will deploy 50,000 of AMD’s upcoming Instinct MI450 AI chips starting in Q3 2026, with plans to expand deployment further in 2027 and beyond. This move is part of Oracle’s effort to offer a publicly available AI supercluster, and is seen as a major step for the company to diversify its AI hardware beyond Nvidia and build a more flexible and cost-efficient cloud ecosystem for AI workloads. In parallel, ORCL revealed OCI Zettascale10, the largest AI supercomputer in the cloud connecting hundreds of thousands of Nvidia GPUs across multiple data centers to form multi-gigawatt clusters that deliver up to an unprecedented 16 zettaflops of peak performance. Analysts view these moves as a vote of confidence in Oracle’s positioning as a hyperscaler providing advanced AI computing capacity, with several additional price-target increases made over the past few days. Citi hiked its target to a Street-high $415, citing increased cloud growth outlook.
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❖ Arista Networks (ANET) shares declined following news that Meta Platforms and Oracle will deploy Nvidia’s Spectrum-X Ethernet switches in their next-generation AI data centers. This strengthens Nvidia’s position in the rapidly growing AI data center networking market and intensifies competition in back-end Ethernet infrastructure. However, some analysts consider the stock drop an overreaction. Arista leads the data center Ethernet switching market with a 21.5% revenue share. The company benefits from deep co-design partnerships with major hyperscalers and AI customers, which supports strong customer stickiness. Arista’s broad portfolio extends beyond data center switching to multi-cloud integration and campus networking, differentiating it from Nvidia’s more hardware-focused approach. Importantly, Arista champions an open, standards-based Ethernet ecosystem, contrasting with Nvidia’s vertically integrated and proprietary solutions. Additionally, Arista’s highly regarded software platform, optimized for AI workloads, remains a durable competitive advantage that Nvidia’s hardware-centric offering may not fully match. Overall, Arista’s strong market position, ecosystem, and software strengths provide resilience despite heightened competition.
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❖ Vertiv Holdings (VRT) continued to log in strong gains on the back of notable business announcements and analyst support. On Monday, VRT said it achieved significant progress in its design plan for the construction of 800-volt direct current (VDC) – a massive megawatt-scale power output designed for industrial use – which has moved from conception to engineering readiness.
Back in May, Nvidia tapped Vertiv and others to support data center power systems for its AI workloads. The goal is transition to 800 VDC infrastructure to beat the limit of traditional servers that are limited to processing up to about 54,000 watts of power, a size common in older data centers. Despite the progress, the actual completion of VRT’s power systems is not expected until the latter half of 2026, with the timing aligned with planned rollout in 2027 of Nvidia’s next-generation computing technology, the Rubin Ultra platforms.
Meanwhile, about half a dozen analysts – including Oppenheimer, BofA, and others – raised their price targets on VRT over the past week, scrambling to catch up with the stock’s advance. Citi analysts have recently put VRT on a bullish 90-day catalyst watch, citing “increased conviction on robust data center infrastructure demand.”
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❖ Taiwan Semiconductor Manufacturing, aka TSMC (TSM) reported a 31.4% year-over-year increase in its September revenue. TSMC’s quarterly sales for the three months ending in September exceeded guidance and analyst expectations, surging 37% year-over-year. Analysts from Susquehanna and Barclays raised their price targets on the stock in the past week going into Q3 earnings release on October 16.
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Portfolio Stocks Under Review
❖ We are keeping Cisco Systems (CSCO) under review due to the stock’s muted performance since mid-August. Although the stock seems to be doing better recently, we prefer to hold it under the magnifying glass until its earnings report in mid-November.
On August 14, Cisco reported strong fiscal Q4 2025 results, with both revenue and EPS beating expectations. AI infrastructure orders far exceeded targets, Splunk integration is boosting security offerings, and its legacy networking business posted double-digit growth even as capex declined. Cisco’s guidance for the upcoming quarter and fiscal year 2026 was positive, projecting both FQ1 and full fiscal year EPS above analyst consensus and outlining continued revenue expansion that may seem modest versus high-growth peers, but is strong compared to CSCO’s recent past.
CSCO is actively reinventing itself – moving from a networking incumbent to a key player in enterprise AI infrastructure. Its scale – 35 million devices and 1 billion clients – and unified hardware, software, and cloud stack create a strong foundation for AI workloads. Innovations such as Cisco Data Fabric and Splunk Federated Search for Snowflake highlight its push toward a unified AI-ready data architecture. The Splunk integration is showing growing synergy, contributing significantly to its security business, which has seen spectacular growth.
The company introduced over 20 new AI-centric products recently, focusing on networking and security solutions that integrate AI capabilities. Just recently, CSCO revealed its new Silicon One P200 chip and the Cisco 8223 router system, designed specifically to address the intense AI workload traffic between data centers. These solutions enable synchronization of geographically separated AI clusters – an essential capability as AI compute demands outgrow single data center capacity. The unified chip architecture combining routing and switching within a single chip meets strong hyperscaler demand, significantly reducing power consumption and simplifying network design. This gives Cisco a competitive edge in the AI data center interconnect market.
Partnerships with Nvidia, Microsoft, and sovereign AI players like HUMAIN reinforce Cisco’s role in the global AI buildout. UAE Stargate – a massive $500 billion AI data center infrastructure project in which CSCO is a key tech partner alongside Nvidia and Oracle – has nearly completed the first 200 megawatts of the planned 5-gigawatt capacity. The recently announced collaboration between NetApp and Cisco, integrating NetApp’s AFX architecture with Cisco Nexus switches, enhances their joint infrastructure solutions with disaggregated storage and advanced networking that efficiently power AI workloads, reinforcing their leadership in AI-ready enterprise data infrastructure.
These innovations and partnerships could serve as important catalysts for the stock and have led some industry analysts to declare CSCO a “must-hold stock” in the AI era. Analyst sentiment remains constructive, with a consensus rating of “Buy” and an average price target implying about 12% upside. Institutional flows remain supportive, while retail positioning is more hesitant. The recent stock behavior shows investors remain cautious, with shares below their August peak despite recent strength.
We are inclined to hold CSCO in the Portfolio but want to see sentiment catch up to fundamentals – or fundamentals break out further – before making a final decision.
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Portfolio Earnings and Dividend Calendar
❖ The Q3 2025 earnings season is now in full swing, with Morgan Stanley (MS) reporting today, and the quarterly releases from TSMC (TSM), Interactive Brokers (IBKR), Bank of New York Mellon (BK), GE Aerospace (GE), RTX (RTX), Amphenol (APH), Teledyne Technologies (TDY), and Vertiv Holdings (VRT) coming over the next week.
❖ The ex-dividend date for EMCOR Group (EME) is today, October 15.
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New Buy: Pfizer (PFE)
Pfizer Inc. is one of the world’s largest biopharmaceutical companies, recognized for pioneering innovations that shape global healthcare. Its portfolio spans vaccines, oncology, immunology, cardiometabolic, and rare-disease therapies – areas addressing some of the most pressing medical needs of modern society. Founded over 175 years ago, Pfizer has consistently served as a cornerstone of pharmaceutical development, from the mass production of penicillin to breakthroughs in mRNA vaccines. Today, the company combines industrial-scale manufacturing with cutting-edge research to deliver both scientific and economic value. With a global network of R&D and production facilities and an expanding U.S. manufacturing base, Pfizer stands at the forefront of medical innovation and policy alignment, bridging scientific discovery with accessible care. Its scale, research breadth, and renewed focus on innovation position Pfizer as a central player in the evolution of next-generation therapeutics.
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Dose of Reinvention
Founded in 1849, Pfizer has evolved from a small Brooklyn chemicals business into one of the world’s most influential pharmaceutical companies – a consistent force in drug discovery, manufacturing, and medical innovation. Its legacy includes breakthroughs that have shaped modern medicine, from mass-producing penicillin during World War II to pioneering cholesterol-lowering therapies and vaccines that reach hundreds of millions of people worldwide.
Over the past five years, Pfizer’s transformation has been both strategic and structural. Following the global rollout of its COVID-19 vaccine, the company reinvested its windfall into a sweeping modernization of its R&D and manufacturing base. This period was marked by a deliberate pivot from pandemic-era concentration toward a diversified and durable growth platform. PFE executed several major acquisitions, including Seagen in 2023, which strengthened its oncology franchise, and Metsera in 2025, re-establishing its presence in the fast-growing obesity and metabolic disease market.
The company also refined its operational scope by spinning off or exiting noncore businesses, focusing instead on therapeutic areas with high scientific and commercial potential – oncology, vaccines, immunology, and cardiometabolic diseases. Simultaneously, Pfizer expanded its global digital infrastructure, embedding advanced analytics, automation, and artificial intelligence across discovery, clinical development, and supply-chain management. These investments are aimed at improving trial efficiency, reducing production costs, and accelerating time-to-market for new therapies.
In 2025, PFE entered a landmark agreement with the Trump administration to provide discounted drug pricing through the TrumpRx platform while committing $70 billion to U.S.-based R&D and manufacturing. The deal secured a three-year tariff reprieve and underscored Pfizer’s strategic alignment with domestic healthcare and industrial policy – effectively repositioning the company as both a pharmaceutical innovator and a pillar of U.S. industrial investment.
Pfizer’s recent trajectory reflects a blend of legacy strength and adaptive reinvention. The company’s acquisition-driven expansion, digital modernization, and alignment with policy incentives have reshaped it from a post-pandemic consolidator into a forward-leaning growth engine. Entering 2026, Pfizer stands not just as a global healthcare leader but as a modern industrial-scientific hybrid – one that merges scale, innovation, and strategic foresight in ways few competitors can match.
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Pipeline of Power
Pfizer operates today as a diversified biopharmaceutical powerhouse anchored in four primary growth engines – oncology, vaccines, immunology, and cardiometabolic diseases – together representing roughly 85% of total revenue. Oncology is the largest, contributing about one-third of sales, followed by vaccines and immunology at around 20-25% each. Cardiometabolic and rare-disease therapies make up the rest.
With more than 80% of its production now based in the U.S. and Europe, PFE stands among the least exposed large-cap drugmakers to trade-war escalation or supply-chain disruption. At the same time, its relatively small but consistent presence in emerging markets – accounting for 14-17% of sales since 2022 – offers a platform for future expansion through vaccine access programs and local partnerships. This balance between domestic strength and selective international reach defines a model that blends global R&D scale with a deepening U.S. manufacturing footprint, positioning Pfizer to compete through innovation, vertical integration, and alignment with national biomanufacturing priorities.
That alignment was cemented in 2025, when Pfizer became the first pharmaceutical company to sign the TrumpRx drug-pricing framework – setting the precedent for industry-wide negotiations. The deal includes $70 billion in U.S.-based R&D and manufacturing investment and a three-year reprieve from pharmaceutical import tariffs. In return, PFE will offer medications at most-favored-nation pricing through the TrumpRx consumer platform, providing discounts of 50-85% while keeping core margins intact. Subsequent agreements by AstraZeneca, Eli Lilly, and Novo Nordisk confirmed Pfizer’s first-mover advantage, strengthening its standing as both a policy and operational benchmark for the industry.
To complement this strategy, Pfizer has launched a direct-to-consumer platform, PfizerForAll, integrating telehealth, virtual prescriptions, and home delivery. The platform mirrors the digital pivot reshaping consumer healthcare, designed to preserve pricing control, gather first-party patient data, and support TrumpRx’s shift toward transparent, patient-centric access.
Pfizer’s business is also becoming more digital and data-driven. AI and advanced analytics are now embedded across R&D, clinical trials, and manufacturing, shortening development timelines and lifting productivity. These systems operate in parallel with its global research infrastructure, accelerating time-to-market and supporting operating leverage – a key margin driver through 2027.
This technological and commercial modernization supports one of the industry’s most extensive pipelines – about 115 drug and vaccine candidates across oncology, immunology, vaccines, and rare diseases – providing a broad foundation for long-term growth. PFE leads global respiratory health innovation, with 13 Phase 3 programs and eight late-stage readouts in 2025, including the Abrysvo RSV vaccine, which holds roughly half of the U.S. market. Ongoing regulatory expansions and AI-assisted discovery underscore its strength in infectious disease and vaccine development.
The company’s focus on obesity marks another strategic evolution. Pfizer’s earlier GLP-1 program, danuglipron, was discontinued after safety concerns, but the 2025 Metsera acquisition re-established its footing in the fast-growing obesity market, projected to exceed $100 billion by 2030. Metsera’s dual-acting GLP-1 and amylin candidates could position Pfizer as a credible challenger to Eli Lilly and Novo Nordisk, especially given their potential for simpler dosing and complementary metabolic benefits.
Pfizer’s COVID-19 franchise – anchored by the Comirnaty vaccine and the Paxlovid antiviral – continues to contribute meaningfully but is naturally tapering. That decline has become a catalyst, accelerating the company’s pivot toward next-generation drivers such as oncology, obesity, and immunology.
Together, these shifts – policy alignment, digital transformation, therapeutic diversification, and technological execution – outline a company moving from post-pandemic recalibration to renewed growth. By coupling industrial-scale R&D with direct patient engagement and resilient domestic production, Pfizer is redefining what a 21st-century pharmaceutical leader looks like: science-led, digitally enabled, and strategically aligned with long-term public health and policy priorities.
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Earnings Immunity
Pfizer’s financial recovery is no longer theoretical – it’s visible in the numbers. After several quarters of post-pandemic drag on earnings, the company has staged a decisive turnaround – a clean break from the trough – driven by cost discipline, normalized inventories, and renewed strength across core franchises. The rebound that began in the back half of 2024, marked by two quarters of triple-digit earnings growth, effectively reset Pfizer’s earnings trajectory from post-pandemic adjustment to genuine growth.
That momentum now looks durable, as the company continues to demonstrate that it can grow and expand margins without pandemic tailwinds. In Q2 2025, Pfizer reported $14.7 billion in revenue, up 10% year-over-year, and adjusted EPS of $0.78, a 30% increase. Both top- and bottom-line figures were well above analyst forecasts of $13.56 billion and $0.58, respectively. The strong quarter marked another in a string of consistent outperformance – PFE has now beaten consensus earnings estimates for seven consecutive quarters, underscoring the durability of its recovery.
Growth was broad-based across core franchises. Oncology, vaccines, and immunology all contributed meaningfully, while key drugs such as Vyndaqel (+21%), Eliquis (+6%), Padcev (+38%), and others continued to post solid gains. Recently launched and acquired product lines generated $4.7 billion in revenue year-to-date – roughly 15% YoY growth – validating Pfizer’s strategy of reinvesting in high-return categories.
Despite a quarterly decline due to the timing of investments and acquisitions, Pfizer still produced $12.4 billion in trailing twelve-month free cash flow at the end of Q2, reflecting strong underlying cash generation. Cost discipline has been a critical lever. Adjusted operating expenses fell 8% YoY as Pfizer advanced its multi-year efficiency program, targeting at least $4.5 billion in cumulative net cost savings by the end of 2025 and $7.7 billion by 2027. Manufacturing optimization alone is expected to contribute $1.5 billion of those savings. Rather than reducing scientific investment, the company is redirecting R&D toward late-stage, high-probability programs – oncology, obesity, and immunology chief among them – supporting margin expansion without slowing innovation.
The balance sheet remains strong, and policy alignment continues to provide a tailwind. Management emphasized that its 2025 guidance already absorbs potential impacts from U.S. pricing reforms, tariffs, and the Most Favored Nation framework. The full-year 2025 outlook calls for adjusted EPS of $2.90-3.10 (up $0.10 from prior guidance) and revenue of $61-64 billion – both consistent with consensus projections at the midpoint.
In Q3, analysts expect revenue to rise to about $16.8 billion, with adjusted EPS around $0.67, factoring in a one-time $0.20 in-process R&D (IPR&D) charge tied to a collaboration with 3SBio. Under this deal, Pfizer paid $1.25 billion upfront for global (ex-China) rights to a late-stage bispecific antibody cancer drug. Pending successful Phase 3 trials, the therapy is expected to launch in late 2026 or 2027, with annual global sales potential approaching $2 billion and margins comparable to Pfizer’s broader oncology portfolio.
The 3SBio deal strengthens Pfizer’s oncology pipeline, expanding its reach in bispecific antibody therapies and creating opportunities for cross-portfolio combinations. Meanwhile, Pfizer also highlighted early contributions from the Metsera acquisition, which re-establishes its presence in the obesity market while immediately enhancing its cardiometabolic pipeline. Although immaterial to 2025 revenue, Metsera’s dual-acting GLP-1 and amylin candidates are projected to add $4-6 billion in annual sales potential later this decade.
The TrumpRx framework, which removed near- and medium-term tariff risk, further supports profitability. Meanwhile, the “One Big Beautiful Bill” fiscal package permanently reinstated immediate expensing for domestic R&D, delivering tax relief that improves cash flow and enables faster reinvestment in research, trials, and manufacturing expansion.
Together, these results mark a structural return to growth – not a temporary rebound – with Pfizer entering the second half of 2025 on firmer footing, backed by stronger cash flow, clearer policy support, and a sharper focus on scalable, high-margin science.
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Prescription for Rebound
Pfizer’s stock has lost about 60% from its pandemic peak in 2021 to its trough in April 2025. The rebound from the bottom has been volatile and hesitant, despite an apparent return to strong earnings growth. That was likely the result of both psychology and politics: investor negativity toward Pfizer became entrenched during its multi-quarter stock underperformance, while the volatile regulatory landscape limited visibility for all healthcare stocks, including PFE. This makes the company’s pioneering role in the TrumpRx framework all the more important, as it creates visibility into the next three years, while also jolting Pfizer back into the headlines and to the front of investor awareness. As a result, we now see a much stronger chance that PFE re-rates, catching up with the company’s robust fundamentals.
Pfizer is down by about 2% this year, strongly outperforming Merck and Bristol-Myers Squibb, while underperforming Amgen – which performed slightly better than the S&P 500 – and trailing far behind the 30%+ gains of AbbVie. Specifically, AbbVie’s case is instructive, as its rise this year was triggered by a combination of “beat-and-raise” reports, favorable drug-exclusivity dynamics, and the EU-U.S. pharmaceutical trade deal that paved the way for its large European operations. The case illustrates that the market will eventually reward companies that combine execution, clarity of growth beyond legacy products, and favorable regulatory or structural shifts. With the regulatory clarity achieved and growth drivers unlocked through Metsera and others, if Pfizer shows consistency on earnings expansion, cost control, and pipeline execution – it should re-rate higher.
While this isn’t Smart Investor’s strongest-conviction pick – Healthcare never is – PFE trades at rock-bottom valuations that are too compelling to ignore. Several of its metrics are lower even than those of some peers PFE has outperformed year-to-date (such as Merck). The stock sits significantly below the peer group averages for GAAP and non-GAAP P/E, Price/Sales, EV/Sales, EV/EBITDA, and Price/Cash Flow – on both trailing and forward metrics. Importantly, its forward non-GAAP PEG ratio of around 1.0 is low both in absolute terms and compared to peers with similar earnings growth outlooks, such as AbbVie and Amgen – and on par with that of a slower-growing Merck – signaling that the market is yet to catch up with Pfizer’s turnaround.
Stock-price appreciation is only part of Pfizer’s investment thesis. The company has a clearly structured capital allocation framework, centered around dividends, reinvestment in growth, bolt-on M&A and collaboration, maintaining balance-sheet flexibility, and selective buybacks. Specifically, dividends are treated as non-negotiable, with their gradual increase a top capital priority. PFE has paid a dividend every year since 1980 and has raised it for 15 consecutive years. The current dividend yield of about 6.9% is one of the highest on the market, while the payout ratio remains moderate at about 55%, underscoring that strict financial discipline goes well with investor returns.
Another sign of that discipline is the pause of share repurchases after the completion of the Seagen acquisition in December 2024 – despite pressures on its stock in H1 2025 and even though it still has an authorized capacity of about $3.3 billion. Management repeatedly emphasized that the company’s focus is on cost savings, debt paydown, organic reinvestment, and margin expansion, with the resumption of buybacks possible after reaching its EBITDA and FCF targets, expected in FY 2026.
For now, the gap between Pfizer’s improving fundamentals and its depressed valuation remains wide – but with operational momentum and financial discipline intact, the conditions for that gap to close are already in place.
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Investing Takeaway
Pfizer offers investors a combination of renewed earnings momentum, policy clarity, and disciplined capital management. The company has transitioned from pandemic normalization to sustainable growth, anchored in oncology, immunology, vaccines, and cardiometabolic innovation. Strategic moves such as the TrumpRx agreement, U.S. manufacturing expansion, and the Metsera acquisition have strengthened visibility and expanded Pfizer’s addressable market. The business now operates with leaner costs, higher margins, and one of the broadest pipelines in the industry, supported by digitalized R&D and global scale. Capital allocation remains balanced – dividends take priority, while reinvestment and targeted deals reinforce long-term competitiveness. With fundamentals improving, political risk contained, and valuation still depressed, Pfizer represents a large-cap healthcare leader positioned for durable recovery and steady value creation through the next cycle.
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New Sell 1: Autodesk (ADSK)
We are selling Autodesk from the portfolio after a period of stagnation in share performance, despite consistently strong fundamentals and upbeat analyst sentiment. The company remains one of the most innovative software platforms in the design and engineering space, but with no near-term catalysts and limited investor appetite for software stocks, reallocating capital appears the prudent move.
Autodesk has done nearly everything right. The rollout of its AI-native Forma platform, the accelerating adoption of its cloud-based Design and Make ecosystem, and the breakout of Flow Studio – recognized by Fast Company as one of the “Next Big Things in Tech 2025” – all underscore the company’s leadership in embedding AI into creative and industrial workflows. Financially, it remains disciplined: revenue and free cash flow guidance were raised in October, margins are solid, and management expanded buybacks to $5 billion. Analysts, including Piper Sandler, have praised Autodesk’s AI strategy as “close to bearing fruit.” TipRanks consensus rates the stock a “Buy” with a potential upside of over 17%.
Yet, the market simply isn’t rewarding software. Despite these advances, Autodesk shares have underperformed the S&P 500, reflecting broader investor caution toward the sector. Its relatively high forward and trailing P/E multiples suggest that much of the optimism may already be priced in, particularly as annualized recurring revenue (ARR) growth has shown mild softness. That metric – a key gauge of demand visibility – will be under scrutiny when earnings arrive on November 25, still six weeks away. A slight miss could erase months of quiet gains. Competitive pressure from lower-cost and open-source tools is also growing, while demand for multi-year contracts has softened, signaling potential moderation ahead.
This exit isn’t a reflection of poor execution – Autodesk’s business remains high quality, with strong customer retention and a compelling AI roadmap. But in the absence of near-term catalysts, continued valuation premium, and an extended wait until the next earnings inflection, the stock is likely to drift rather than lead. Freeing up capital now allows us to pursue opportunities with more immediate upside potential. We will revisit Autodesk when sentiment toward the software sector improves or when its next leg of AI monetization becomes clearer.
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New Sell 2: Emerson Electric Company (EMR)
We are selling Emerson Electric after a steady but uninspired stretch in which the stock has underperformed the S&P 500 and shown little momentum despite solid fundamentals. The company remains best-in-class in automation and industrial software, yet near-term upside appears capped by valuation, sentiment, and timing.
Since its inclusion in June, EMR is up roughly 3% versus a stronger market. Analysts remain broadly positive with an average 12% upside target, but even supporters concede there are no immediate catalysts ahead of November 11 earnings. The past two quarters showed narrow EPS beats but recurring revenue misses, soft discrete automation sales, and a muted Europe recovery. That combination has weighed on confidence and kept shares rangebound since August.
The risk now is that the next print becomes a negative catalyst. Emerson flagged $210 million in tariff costs for 2025, and with the trade war narrative back in focus, that figure will likely resurface in headlines regardless of underlying resilience. Although the company is well-positioned to offset these pressures through pricing and supply-chain localization, market perception often moves faster than fundamentals. Meanwhile, the valuation no longer looks discounted – with forward non-GAAP PEG at 2.24 and P/E ratios above sector medians, investors may hesitate to pay up for modest mid-single-digit growth.
This sale is not about quality – Emerson remains a well-run, strategically sound enterprise with long-cycle relevance. But until macro noise fades and new demand drivers emerge, the risk-reward has flattened. Locking in modest gains now allows us to reallocate toward names with clearer near-term potential, while keeping EMR on the watchlist for a reentry when sentiment and setup improve.
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Smart Investor’s Winners Club
The 30% Winners Club represents stocks from the Smart Investor Portfolio that have risen at least 30% since their purchase dates.
Markets have been volatile, and the Club has lost its newest members, RTX. Now, the Winners are down to 16 stocks: AVGO, GE, ORCL, ANET, EME, TSM, HWM, APH, IBKR, PH, VRT, CRWD, GOOGL, MTZ, UBER, and IBM.
The first contender for the Club’s entry is still BK with a 29.61% gain since purchase. Will it return to the ranks of the Winners, or will another stock outrun it to the finish line?
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