We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The study’s two primary immunogenicity objectives were to demonstrate that the antibody responses elicited by the combination vaccine against the SARS-CoV-2 strain and influenza A and B strain were non-inferior to standard of care (“SOC”).
The combination vaccine demonstrated comparable responses against the SARS-CoV-2 strain versus Pfizer’s COVID-19 vaccine, Comirnaty. The vaccine also demonstrated a continued trend of higher responses against influenza A. However, the combination vaccine failed to show non-inferiority against the influenza B strain in geometric mean titers and seroconversion. The companies are evaluating adjustments to their combination vaccine program to improve immune responses against influenza B and will discuss the next steps with health authorities.
After Pfizer's better-than-expected earnings performance in the second quarter, this pipeline setback has investors wondering whether to sell Pfizer’s stock. A single setback is not so important for long-term investors, and the focus should, rather, be on the company’s strong fundamentals.
Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock post this pipeline setback.
Sales of COVID Products Declining
Sales of Pfizer’s COVID products, Comirnaty and Paxlovid, declined steeply in 2023 due to lower demand following the end of the pandemic. In 2024, Pfizer expects revenues from Paxlovid and Comirnaty to decline further. The 2024 revenue guidance includes $8.5 billion in potential combined revenues for Paxlovid and Comirnaty, which is significantly lower than the combined revenues of $12.5 billion for 2023.
Strong Second-Quarter Results
Pfizer’s second-quarter results were strong as it beat estimates for earnings as well as sales. This was Pfizer’s first quarter of top-line growth after reporting declines for the past five quarters. Sales of key products like Vyndaqel and Eliquis beat estimates. Seagen drugs contributed $845 million to the top line in the second quarter. Revenues from Pfizer’s non-COVID products rose 14% operationally in the second quarter. The company also raised its 2024 earnings and revenue expectations.
New Drugs & Seagen to Drive Growth
2023 was a record year for Pfizer in terms of FDA approvals. It received nine new medicine/vaccine approvals that are expected to drive growth in the future years.
Though COVID revenues are declining, Pfizer’s non-COVID operational revenue improved in the first half of 2024, driven by its key in-line products like Prevnar, Vyndaqel and Eliquis, new launches like Abrysvo, Velsipity, Penbraya, newly acquired products like Nurtec as well as those acquired from Seagen (December 2023). The trend is expected to continue in the second half.
Pfizer’s new products/late-stage pipeline candidates, coupled with newly acquired products, including those acquired from Seagen, position Pfizer strongly for operational growth in 2025 and beyond. Pfizer expects 2025 to 2030 revenue CAGR to be approximately 6%.
Pfizer expects the acquisition of Seagen to contribute more than $10 billion in 2030 risk-adjusted revenues with potential significant growth beyond 2030.
Strong Position in Oncology
Pfizer is one of the largest and most successful drugmakers in the field of oncology. Its position in oncology was strengthened with the addition of Seagen. Oncology sales comprise more than 26% of its total revenues. Its oncology revenues grew 23% on an operational basis in the first half of 2024, driven by drugs like Xtandi, Lorbrena, the Braftovi-Mektovi combination and Seagen’s cancer drugs. Pfizer has ventured into the oncology biosimilars space and markets six biosimilars for cancer. Pfizer also advanced its oncology clinical pipeline in 2024, with several candidates entering late-stage development. By 2030, it expects to have eight or more blockbuster oncology medicines in its portfolio.
Valuation, Estimates and Price
Pfizer’s stock failed to deliver any returns year to date against an increase of 24.1% for the industry. The stock has also underperformed the sector as well as the S&P 500.
From a valuation standpoint, Pfizer appears attractive relative to the industry and is trading below its mean. Going by the price/earnings ratio, the company shares currently trade at 10.56 forward earnings, lower than 20.03 for the industry and the stock’s mean of 11.49. The stock is also much cheaper than other large drugmakers like Novo Nordisk (NVO - Free Report) and Lilly (LLY - Free Report) .
PFE Stock Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for earnings has risen from $2.39 to $2.57 per share for 2024 over the past 30 days, while that for 2025 has risen from $2.75 per share to $2.82 per share.
Image Source: Zacks Investment Research
Conclusion
Though in 2021/2022, no company was as strongly placed in the COVID vaccines/treatment market as Pfizer, once the pandemic ended, its woes began. Its stock price hit new lows in 2023 and 2024. Investors’ concerns rose about its long-term growth drivers beyond its COVID-related products due to competitive pressure. Some even questioned Pfizer’s fundamentals and growth prospects. Its sales fell 42% in 2023 from a record high of $100 billion in 2022.
However, Pfizer’s worst slowdown seems to be over now, and the company looks set to make a comeback. Its non-COVID drugs and potential contribution from new and newly acquired products have started to drive growth.
In June, Pfizer said that it would move forward with the development of a once-daily formulation of danuglipron, its GLP-1 candidate for obesity, based on encouraging results from an ongoing study. This announcement marked Pfizer’s comeback in the lucrative obesity market after facing some setbacks.
The company continues to pay regular dividends. Its dividend yield stands at around 6%, which is quite impressive. Also, Pfizer expects cost cuts and internal restructuring, including layoffs, to deliver savings of $4 billion in 2024. Huge profits from its COVID products strengthened its cash position. The funds are being used to make acquisitions, increase dividends, buy back shares and reduce debt.
The latest setback is quite minor, considering Pfizer’s growth prospects. Consistently rising estimates indicate investors’ optimistic outlook for growth. After Pfizer’s better-than-expected second-quarter results and the encouraging outlook for the year, investors who own Pfizer’s stock may stay invested. Some investors might consider buying this pharmaceutical giant’s stock at the rock-bottom valuation for long-term gains.
Image: Bigstock
How Should You Play Pfizer (PFE) After COVID-Flu Shot Setback?
Last week, Pfizer (PFE - Free Report) and partner BioNTech (BNTX - Free Report) announced that a phase III study evaluating an mRNA-based combination vaccine candidate against influenza and COVID-19 missed one of its two primary immunogenicity objectives.
The study’s two primary immunogenicity objectives were to demonstrate that the antibody responses elicited by the combination vaccine against the SARS-CoV-2 strain and influenza A and B strain were non-inferior to standard of care (“SOC”).
The combination vaccine demonstrated comparable responses against the SARS-CoV-2 strain versus Pfizer’s COVID-19 vaccine, Comirnaty. The vaccine also demonstrated a continued trend of higher responses against influenza A. However, the combination vaccine failed to show non-inferiority against the influenza B strain in geometric mean titers and seroconversion. The companies are evaluating adjustments to their combination vaccine program to improve immune responses against influenza B and will discuss the next steps with health authorities.
After Pfizer's better-than-expected earnings performance in the second quarter, this pipeline setback has investors wondering whether to sell Pfizer’s stock. A single setback is not so important for long-term investors, and the focus should, rather, be on the company’s strong fundamentals.
Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock post this pipeline setback.
Sales of COVID Products Declining
Sales of Pfizer’s COVID products, Comirnaty and Paxlovid, declined steeply in 2023 due to lower demand following the end of the pandemic. In 2024, Pfizer expects revenues from Paxlovid and Comirnaty to decline further. The 2024 revenue guidance includes $8.5 billion in potential combined revenues for Paxlovid and Comirnaty, which is significantly lower than the combined revenues of $12.5 billion for 2023.
Strong Second-Quarter Results
Pfizer’s second-quarter results were strong as it beat estimates for earnings as well as sales. This was Pfizer’s first quarter of top-line growth after reporting declines for the past five quarters. Sales of key products like Vyndaqel and Eliquis beat estimates. Seagen drugs contributed $845 million to the top line in the second quarter. Revenues from Pfizer’s non-COVID products rose 14% operationally in the second quarter. The company also raised its 2024 earnings and revenue expectations.
New Drugs & Seagen to Drive Growth
2023 was a record year for Pfizer in terms of FDA approvals. It received nine new medicine/vaccine approvals that are expected to drive growth in the future years.
Though COVID revenues are declining, Pfizer’s non-COVID operational revenue improved in the first half of 2024, driven by its key in-line products like Prevnar, Vyndaqel and Eliquis, new launches like Abrysvo, Velsipity, Penbraya, newly acquired products like Nurtec as well as those acquired from Seagen (December 2023). The trend is expected to continue in the second half.
Pfizer’s new products/late-stage pipeline candidates, coupled with newly acquired products, including those acquired from Seagen, position Pfizer strongly for operational growth in 2025 and beyond. Pfizer expects 2025 to 2030 revenue CAGR to be approximately 6%.
Pfizer expects the acquisition of Seagen to contribute more than $10 billion in 2030 risk-adjusted revenues with potential significant growth beyond 2030.
Strong Position in Oncology
Pfizer is one of the largest and most successful drugmakers in the field of oncology. Its position in oncology was strengthened with the addition of Seagen. Oncology sales comprise more than 26% of its total revenues. Its oncology revenues grew 23% on an operational basis in the first half of 2024, driven by drugs like Xtandi, Lorbrena, the Braftovi-Mektovi combination and Seagen’s cancer drugs. Pfizer has ventured into the oncology biosimilars space and markets six biosimilars for cancer. Pfizer also advanced its oncology clinical pipeline in 2024, with several candidates entering late-stage development. By 2030, it expects to have eight or more blockbuster oncology medicines in its portfolio.
Valuation, Estimates and Price
Pfizer’s stock failed to deliver any returns year to date against an increase of 24.1% for the industry. The stock has also underperformed the sector as well as the S&P 500.
PFE Stock Underperforms Industry, Sector & S&P 500
Attractive Valuation & Rising Estimates
From a valuation standpoint, Pfizer appears attractive relative to the industry and is trading below its mean. Going by the price/earnings ratio, the company shares currently trade at 10.56 forward earnings, lower than 20.03 for the industry and the stock’s mean of 11.49. The stock is also much cheaper than other large drugmakers like Novo Nordisk (NVO - Free Report) and Lilly (LLY - Free Report) .
PFE Stock Valuation
The Zacks Consensus Estimate for earnings has risen from $2.39 to $2.57 per share for 2024 over the past 30 days, while that for 2025 has risen from $2.75 per share to $2.82 per share.
Conclusion
Though in 2021/2022, no company was as strongly placed in the COVID vaccines/treatment market as Pfizer, once the pandemic ended, its woes began. Its stock price hit new lows in 2023 and 2024. Investors’ concerns rose about its long-term growth drivers beyond its COVID-related products due to competitive pressure. Some even questioned Pfizer’s fundamentals and growth prospects. Its sales fell 42% in 2023 from a record high of $100 billion in 2022.
However, Pfizer’s worst slowdown seems to be over now, and the company looks set to make a comeback. Its non-COVID drugs and potential contribution from new and newly acquired products have started to drive growth.
In June, Pfizer said that it would move forward with the development of a once-daily formulation of danuglipron, its GLP-1 candidate for obesity, based on encouraging results from an ongoing study. This announcement marked Pfizer’s comeback in the lucrative obesity market after facing some setbacks.
The company continues to pay regular dividends. Its dividend yield stands at around 6%, which is quite impressive. Also, Pfizer expects cost cuts and internal restructuring, including layoffs, to deliver savings of $4 billion in 2024. Huge profits from its COVID products strengthened its cash position. The funds are being used to make acquisitions, increase dividends, buy back shares and reduce debt.
The latest setback is quite minor, considering Pfizer’s growth prospects. Consistently rising estimates indicate investors’ optimistic outlook for growth. After Pfizer’s better-than-expected second-quarter results and the encouraging outlook for the year, investors who own Pfizer’s stock may stay invested. Some investors might consider buying this pharmaceutical giant’s stock at the rock-bottom valuation for long-term gains.
Pfizer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.