Pfizer (PFE 0.48%), the one-time COVID vaccine hero turned Ozempic craze zero, is marching higher Monday after announcing it will try to recover from its danuglipron setback by buying another drug company with weight loss dreams.

As of 12:25 p.m. ET, Pfizer stock is up 2.1 %.

Image source: Getty Images.

Pfizer buys Metsera

Pharmaceutical giant Pfizer intends to purchase smaller Metsera (MTSR 62.03%), which has “four highly differentiated clinical-stage incretin and amylin programs.” These include:

• MET-097i, an injectable GLP-1 weight loss drug in Phase 2 clinical trials
• A Phase 1 injectable GLP-1 drug called MET-233i
• Two preclinical trial oral GLP-1 candidates

Pfizer intends to pay $47.50 per share up front to acquire all of Metsera’s stock, plus potentially $22.50 per share more in milestone payments as Metsera’s drug candidates progress through trials to the marketplace. When all’s said and done, Pfizer could end up paying as much as $7.2 billion to get back in the GLP-1 weight loss game.

Is Pfizer stock a buy?

This is not a cheap price, and Pfizer’s not in the best position to pay it. Valued at more than $136 billion in market capitalization, Pfizer sports a reasonable price-to-free-cash-flow (FCF) ratio, but its $50 billion in net debt (largely taken on through prior ill-considered acquisitions) inflates its enterprise value-to-FCF ratio to 15.

Ordinarily, that would be a fine valuation, except most analysts expect Pfizer’s profits to shrink, not expand, in future years. The company’s making a risky and expensive bet here in hopes it can win entry into the GLP-1 space and start growing again… eventually.

Success isn’t certain, however. If Metsera’s drugs don’t pan out, Pfizer could end up paying twice what Metsera stock was worth Friday, and get little or nothing out of it.