Healthcare Stocks

Healthcare Stocks Hit Multi-Decade Lows: Why Pfizer and Vertex Could Lead the Recovery

Published

1 month ago

September 20, 2025

The healthcare sector is currently trading at some of the lowest valuations seen in more than three decades. For investors, this represents both a challenge and an opportunity. Recent headwinds — ranging from patent expirations and weaker financial results to global market pressures — have weighed heavily on many healthcare giants. But beneath the surface, several companies are still innovating, strengthening their pipelines, and cutting costs in ways that could set them up for a powerful recovery.

Two of the most interesting opportunities in this space right now are Pfizer (NYSE: PFE) and Vertex Pharmaceuticals (NASDAQ: VRTX). Both companies are very different — one is a classic value play with a turnaround story, while the other is a high-growth biotech innovator — yet both could reward patient investors.

Why Healthcare Stocks Look Attractive Again

Healthcare is one of the most defensive sectors in the stock market. People don’t stop needing medicines, treatments, or vaccines during economic downturns. However, several healthcare companies have recently seen their valuations hit historic lows, largely because of:

Patent cliffs: Big pharma companies are losing exclusivity on blockbuster drugs.
Post-COVID slowdown: Pandemic-era vaccine sales dropped sharply.
Rising competition: Biotech challengers and generic drug makers are growing.
Regulatory pressures: Pricing reforms and government scrutiny are squeezing margins.

But here’s the catch: valuations today are extremely attractive compared to historical averages. For opportunistic investors, this could be the best time in decades to explore the sector.

Pfizer: A Value Stock with a Turnaround Story

Pfizer has had a rough few years, mostly due to declining COVID-19 vaccine revenues and looming patent expirations. Drugs like Eliquis, a blood thinner, are set to lose exclusivity by 2029. These challenges, combined with weaker results in prior quarters, have weighed heavily on its share price.

But things are starting to look up:

Improved financial results: In Q2, Pfizer’s revenue rose 10% year over year to $14.7 billion, while adjusted earnings per share jumped 30% YoY to $0.78.
New product pipeline: Several recently approved drugs are still in early growth stages. For instance, Abrysvo, Pfizer’s RSV vaccine, delivered 155% revenue growth YoY.
Stronger oncology pipeline: Licensing deals and acquisitions have boosted Pfizer’s presence in cancer treatments.
Cost-cutting measures: Pfizer is targeting $4.5 billion in savings by year-end and $7.2 billion by 2027, which should support profitability.

Most importantly, Pfizer’s valuation is cheap compared to the broader healthcare industry. Its forward price-to-earnings (P/E) ratio is around 7.7, less than half of the sector average of 16.5. For investors seeking value, Pfizer looks positioned for a rebound.

Vertex Pharmaceuticals: Innovation-Driven Growth

While Pfizer is a classic recovery play, Vertex Pharmaceuticals represents the growth side of healthcare investing. The company has faced challenges in 2024, including clinical trial setbacks and sales disruptions in Russia, but its long-term outlook remains compelling.

Here’s why:

Dominance in cystic fibrosis (CF): Vertex holds a monopoly in CF treatments, with products like Trikafta and Alyftrek protected by patents until the late 2030s. Thousands of eligible patients remain untreated, leaving significant room for growth.
New product launches:
- Journavx: The first approved oral, non-opioid pain medication, launched in early 2024. It addresses a massive need, offering an alternative to addictive opioid therapies.
- Casgevy: A cutting-edge gene-editing therapy for sickle cell disease and beta-thalassemia. While still in its early stages, it has little competition and strong long-term potential.
Pipeline potential: Vertex is working on zimislecel, a promising therapy for type 1 diabetes that could be approved within the next two years. Other late-stage candidates may add further upside.

Yes, Vertex’s forward P/E ratio of around 20+ looks expensive compared to Pfizer’s. But given its strong pipeline and innovative therapies, investors could see significant long-term growth.

Investment Outlook: Buy, Hold, or Wait?

The question investors face is simple: Is now the right time to buy healthcare stocks?

Pfizer: For value-seeking investors, Pfizer looks attractive at today’s levels. It offers a cheap valuation, improving results, and a diversified pipeline. It’s best suited for long-term investors willing to wait for a turnaround.
Vertex Pharmaceuticals: For growth-focused investors, Vertex offers exposure to cutting-edge treatments in cystic fibrosis, pain management, gene editing, and possibly diabetes. Its higher valuation reflects its innovation potential.

Ultimately, these two companies complement each other. Pfizer provides defensive value, while Vertex offers long-term growth. A balanced portfolio could benefit from owning both.

Final Thoughts

Healthcare stocks are at their lowest valuations in decades, making this a rare moment for investors to consider stepping in. Despite recent challenges, the long-term demand for healthcare innovation remains strong.

Pfizer is rebuilding its pipeline and cutting costs to bounce back, while Vertex continues to innovate with game-changing therapies. Together, they highlight the two sides of healthcare investing: value and growth.

For investors willing to look beyond short-term noise, this sector could be on the verge of a turnaround — and Pfizer and Vertex might just lead the charge.

⚠️ Disclaimer

This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult with a professional financial advisor before making investment decisions.