There’s seemingly a lot to like when it comes to Pfizer (NYSE:PFE) stock. But there’s one key missing ingredient. The good news is that PFE stock is cheap. A dividend yield over 4% helps the case for Pfizer as a value play.

But the bad news is that Pfizer stock looks cheap for very good reason. Pfizer simply isn’t in a position to drive the consistent, long-term growth investors prize. The company’s new Covid-19 vaccine is providing some help in 2021, but even that doesn’t look like enough.

Certainly, the nature of drug development suggests that Pfizer is only one blockbuster away. But it’s difficult to see from where that blockbuster is supposed to come. Until it shows up, investors can do better than PFE stock.

The Case for PFE Stock

The headline figures for PFE admittedly look strong.

Shares trade at 12x forward earnings. That’s one of the lower multiples in the S&P 500 (a quick screen shows that PFE is cheaper by that metric than about 85% of the stocks in that key index).

The dividend yield, currently at 4.22%, is attractive when the 10-year Treasury yields just 1.68%. And Pfizer’s dividend has been boosted at a solid clip nicely, nearly doubling over the last decade for a 7% annualized growth rate.

Meanwhile, Pfizer is expecting explosive growth in 2021. Based on guidance given with the Q4 FY2020 earnings release, revenue should grow in the range of 44% this year. Adjusted earnings per share will skyrocket to a guided range of $3.10-$3.20 against $2.22 in 2020.

Anyway you slice these numbers, Pfizer stock looks far too cheap.

Looking Closer

But let’s take a closer look.

The forward earnings multiple is telling us that the market doesn’t believe Pfizer will grow all that fast after 2021. And that makes some sense.

Because what’s driving a good chunk of this year’s growth is the company’s Covid-19 vaccine. According to the Q4 release, Pfizer expects vaccine revenue of $15 billion this year.

That revenue accounts for about 80% of the forecasted top-line increase. But it’s not revenue that is going to last forever.

Certainly, and unfortunately, vaccine revenues aren’t going to fall off a cliff. The novel coronavirus is going to be around for a while in some form and with some impact.

But competitors are coming. Treatments are improving. There’s a massive amount of pent-up demand here in 2021. In 2022, a more normalized market will have more approved vaccines.

Indeed, Wall Street sees overall profits and revenue declining in 2022. And while analysts don’t always get it right, and there’s obviously a great deal of uncertainty, that trend seems logical. At least as far as the vaccine goes, 2021 is an outlier year.

As for the dividend, it does help. But PFE stock has had a high yield for a while now. Meanwhile, dividend growth has slowed quite a bit of late. I’m skeptical that even in a low-interest-rate environment, a yield alone can move PFE stock.

Growth Is Needed

Certainly, it hasn’t done so over the past few years. Pfizer stock has rallied 20% over the past five years. That performance is worse than most other major drug-makers. Meanwhile, the S&P 500 has better than doubled over that same stretch.

To be fair, lagging the index isn’t a surprise. A defensive stock like PFE usually will underperform in a bull market. That’s the tradeoff for expected outperformance when equities turn south.

But the performance relative to peers is a problem. And it’s not a new problem. PFE in fact still trades below its highs from the late 1990s.

The core reason is simple: Pfizer doesn’t have a big-time blockbuster on its hands. Certainly, it hasn’t been able to offset the patent expirations of both Lipitor and Viagra.

Indeed, if you go back to 2011, Pfizer generated revenue of $65.3 billion and adjusted net income of $17.8 billion. In 2019, the figures were $41.1 billion and $16.7 billion, respectively.

2020 results are skewed by pandemic impacts plus the spin-off of the company’s off-patent business. Adjusted net income did rise 16% year-over-year on a comparable basis.

Still, we’re seeing close to a decade of declining revenue and flattish profits, even on an adjusted basis. And that’s what needs to change. The boost this year from the vaccine is helpful — but not helpful enough.

In that context, a 12x forward earnings multiple isn’t an opportunity. Rather, it’s logical.

The market is pricing in flattish bottom-line growth, which is exactly what Pfizer has delivered for almost ten years. If the next few years don’t look any different, the middling performance of PFE stock won’t be either.

On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in the article.

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