Personal Finance

Pfizer Stock: Is PFE Stock A Sell As Its 2024 Update Weighs On Covid Vaccine Shares?

Pfizer (PFE) stock crashed in mid-December after the Covid vaccine maker issued a disappointing outlook for 2024 ahead of its now complete Seagen takeover.




X



For the next year, Pfizer expects $58.5 billion to $61.5 billion in full-year sales and adjusted profit of $2.05 to $2.25 per share. That widely missed expectations for $62.66 billion and $3.13 per share, respectively. The earnings guidance largely excludes the impact of the Seagen takeover, Pfizer said in a news release.

The update comes amid declining demand for Covid vaccines. Pfizer partner BioNTech (BNTX), Moderna (MRNA) and Novavax (NVAX) are also feeling the heat. In the third quarter, sales of Covid shot Comirnaty and antiviral pill Paxlovid “meaningfully underperformed already tempered expectations,” Third Bridge analyst Lee Brown said in a report.

Promisingly, third-quarter sales of its vaccines for respiratory syncytial virus, or RSV, and pneumococcal disease beat expectations. In general, RSV causes cold-like symptoms, but it can be serious or deadly in infants and older adults. Pfizer and GSK (GSK) gained Food and Drug Administration approval this year for RSV vaccines for adults ages 60 and older.

On a bearish note, Pfizer delayed its messenger RNA-based flu shot by a year after the vaccine showed promise against A strains, but had little impact against B strains. Moderna had a similar setback.

Further, Pfizer scrapped development of once-daily and twice-daily pills for patients with type 2 diabetes following unexpected side effects in testing. The company is now focusing on another once-a-day pill. Pfizer is hoping to compete against Novo Nordisk (NVO) and Eli Lilly (LLY), which are currently leading the market for these so-called GLP-1 drugs.

In other buyout and deal news, Pfizer bought Biohaven Pharmaceuticals for its migraine assets, including Nurtec, and Global Blood Therapeutics for its sickle cell disease treatment. Further, Pfizer invested $25 million in Caribou Biosciences (CRBU).

So, all in all, is PFE stock a buy or a sell right now?

Pfizer Stock Fundamentals: Earnings Beat

In the third quarter, Pfizer lost 17 cents per share, minus some items, on $13.23 billion in sales.

Sales tumbled 42% on a strict, as-reported basis and missed expectations for $13.34 billion, according to FactSet. Losses swung from a gain of $1.78 per share in the same three months last year. Losses beat some expectations and missed others.

Comirnaty sales tumbled 70% to $1.31 billion, while revenue from Paxlovid “all but disappeared,” Third Bridge’s Brown said. Sales of the pill collapsed 97% to $202 million. But RSV vaccine Abrysvo topped expectations with $375 million, while pneumococcal shot, Prevnar 20, came in ahead at $1.85 billion.

Revenue from blood thinner Eliquis, which is sold in partnership with Bristol Myers Squibb (BMY), climbed just 2% to $1.5 billion and missed forecasts for $1.56 billion.

For the fourth quarter, Pfizer stock analysts forecast losses of 17 cents per share and $14.28 billion in sales. Earnings would flip from a year-earlier gain of $1.14 per share and sales would fall more than 41%.

Investors are encouraged to seek stocks with 20%-25% recent sales and earnings growth. Pfizer is not hitting those marks. Big institutional investors — who account for up to 70% of all market trades — usually look for stocks with accelerating earnings and sales growth.

Pharmaceutical Company’s Annual Metrics

Pfizer’s sales hit a record $100.33 billion in 2022. Top sellers included Comirnaty and Paxlovid, which brought in a respective $37.81 billion and $18.93 billion in sales.

Blood thinner Eliquis brought in $6.48 billion, up 9% on a strict, as-reported basis. Sales of pneumonia vaccine Prevnar climbed 20% to $6.34 billion.

But other key products saw downfalls. Revenue from Xeljanz, which treats inflammatory conditions, tumbled 27% to almost $1.8 billion. Sales of cancer drug Ibrance also fell 6% to $5.12 billion.

For 2023, Pfizer expects adjusted earnings of $1.45 to $1.65 per share and $58 billion to $61 billion in sales. At the midpoint, earnings would tumble 76% and sales would fall 41%.

The company also issued a disappointing 2024 outlook. Sales would be roughly flat with the Street’s 2023 expectations, while earnings would surge more than 24% at the midpoint.

Pfizer Stock And Recent News

Pfizer recently gained several notable FDA approvals.

The FDA U.S. approved a combination of drugs Braftovi and Mektovi in patients whose lung cancer has spread. Further, the FDA approved Pfizer’s ulcerative colitis drug. In a Phase 3 study, 27% of patients who received the Pfizer drug, Velsipity, entered remission after 12 weeks vs. just 7% of placebo recipients. The agency also approved Pfizer’s vaccine to block five strains of a virus that causes meningococcal disease.

The Covid vaccine launch is also in full swing. Shots from Pfizer, Moderna and Novavax block the XBB.1.5 subvariant of omicron. From Nov. 26 to Dec. 9, it accounted for less than 1% of sequenced cases, in comparison to 29.6% for HV.1, the dominant strain.

Pfizer is also eyeing the diabetes treatment landscape. But the company halted development of a twice-a-day pill following high rates of side effects including nausea and vomiting. An earlier once-daily version of its treatment led to elevated liver enzymes. Now, Pfizer is looking to develop a new once-a-day pill.

Investors and patients are zeroing in on a series of approved and experimental drugs that lead to weight loss. They mimic a gut hormone that signals to the brain when the stomach is full. They also help increase insulin production in the pancreas, improving blood sugar control.

Pfizer is now seeking approval in the U.S. and Europe for an under-the-skin shot for hemophilia A and B patients. The drug led to a 92% cut in annualized bleeding rates compared to a 35% drop for patients who received standard treatments.

Technical Analysis: PFE Stock Hits 50-Day Line

Pfizer stock is trading well below its 200-day moving average and 50-day line, according to MarketSmith.com. It’s important to note, shares are not forming a chart pattern for investors to watch.

(Related: Keep tabs on chart patterns by visiting IBD’s MarketSmith.com.)

Shares of Pfizer have a Composite Rating of 19 out of a best-possible 99. The measure weighs a stock’s key growth metrics against all other stocks. Leading stocks tend to have Composite Ratings of 95 or better, according to IBD Digital.

Pfizer stock has a Relative Strength Rating of 10 out of a best-possible 99. The RS Rating measures a stock’s 12-month running performance against all other stocks. That RS Rating means Pfizer stock ranks in the bottom 10% of all stocks in terms of performance over the last year.

The pharmaceutical company’s EPS Rating, a measure of profitability, is 41 out of a best-possible 99. The EPS Rating compares a stock’s recent and longer-term earnings growth against all other stocks.

So, Is PFE Stock A Buy Or A Sell?

Based on savvy rules of investing, PFE stock isn’t a buy right now. The company’s fundamental and technical metrics still need some work. Also, Pfizer stock isn’t forming a chart pattern with a clear entry for investors.

By one metric, shares could be considered a sell after they dropped definitively below their 50-day moving average in January. Shares have tried to retake that line, but only briefly succeeded.

It will be important to keep tabs on how Pfizer stock performs as the company shores up its pipeline and moves beyond the astronomical growth it saw at the height of the pandemic.

Investors are closely watching the adult RSV vaccine, which hit the market at the same time as a rival from GSK. The diabetes pill is further behind, but could also be an important contributor for Pfizer.

To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

YOU MAY ALSO LIKE:

Biotech Stocks To Watch And Pharma Industry News

Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader

IBD Stock Of The Day: See How To Find, Track And Buy The Best Stocks

Watch IBD’s Investing Strategies Show For Actionable Market Insights

Best Growth Stocks To Buy And Watch: See Updates To IBD Stock Lists

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button