BMO Capital upgraded Pfizer (PFE) to Outperform from Market Perform, as the firm thinks that investors could become more upbeat about the productivity of the company's R&D due to upcoming developments in its pipeline. Moreover, it predicts that the company's profits will grow by high single digit percentage levels and says that its risk/reward ratio is positive.

Pipeline 

Pfizer "appears to have" a number of drugs in development that could become "blockbusters," according to BMO Capital analyst Alex Arfaei. Half of these potential blockbusters could be approved by 2020 and Pfizer does not anticipate that it will be negatively impacted by losing exclusivity on any drug from 2020-2025, the analyst stated.

Among the drugs identified by Arfaei as potential blockbusters, he is most upbeat on Pfizer's biosmilar products, its Ibrance drug for breast cancer, its Xeljanz drug being tested in multiple indications and its anti blood clotting drug, Eliquis.

Profit Outlook 

Pfizer appears to be poised "for several years of somewhat steady" revenue growth of approximately 2%-3%, along with margin expansion, Arfaei believes. As a result, he expects its profits to rise by high single digit percentage levels.

Risk/reward

Pfizer's stock has "limited risk," since it has "low pipeline expectations," a roughly 4% dividend yield and significant share buybacks, the analyst stated. Arfaei raised his price target on the stock to $37 from $33.

In morning trading, Pfizer was little changed at $32.74. Over the last three months, the stock is down 2.5%.