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Pfizer (PFE) stock continued its 11-month decline in November after its third-quarter sales missed expectations amid waning demand for Covid products.
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In a Halloween update, Pfizer reported a 41% operational decline in sales and losses that missed some expectations. Revenue from Covid vaccine Comirnaty and antiviral pill Paxlovid “meaningfully underperformed already tempered expectations,” Third Bridge analyst Lee Brown said in a report.
Analysts are now watching how demand progresses for Pfizer’s BioNTech (BNTX)-partnered Covid vaccine. The company has launched an updated booster to target the XBB.1.5 variant. That variant accounts for just a fraction of cases today, according to the Centers for Disease Control and Prevention. A new variant called HV.1 has since emerged as dominant.
Promisingly, 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, the company delayed its messenger RNA-based flu shot by a year after the vaccine showed promise against A strains in adults ages 18 to 64. But the vaccine had little impact against B strains of influenza. Moderna (MRNA) experienced a similar setback.
But Pfizer and BioNTech said in late October a combination vaccine against influenza and Covid showed “robust” responses against A and B strains of flu and Covid variants.
Meanwhile, analysts are closely watching Pfizer’s efforts in diabetes and obesity treatment. It’s testing a twice-daily pill for patients with type 2 diabetes in an attempt to compete with Novo Nordisk (NVO) and Eli Lilly (LLY). Pfizer scrapped development of a once-daily pill after discovering it led to elevated liver enzymes.
Pfizer is also closing in on its $43 billion acquisition of Seagen (SGEN). 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 8 cents per share and $14.89 billion in sales. Earnings would flip from a year-earlier gain of $1.14 per share and sales would fall 38.7%.
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%.
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. 12 to Nov. 25, it accounted for less than 1% of sequenced cases, in comparison to 31.7% for HV.1, the dominant strain.
Pfizer is also eyeing the obesity treatment landscape. Over 16 weeks, patients who took a high dose of Pfizer’s twice-a-day pill lost roughly 10 pounds. In comparison, people who received a high dose of Novo’s Ozempic shot lost that much over the course of 30 weeks, according to the company’s Phase 3 study.
But Pfizer had to scrap its once-daily pill in testing due to elevated liver enzymes. The company says it’s working on a new formulation that could be a once-daily 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 also tested an under-the-skin shot for hemophilia A and B treatment. The drug led to a 92% cut in annualized bleeding rates compared to a 35% drop for patients who received standard treatments. But an analyst says the mechanism Pfizer is using could lead to clotting problems in a bigger study.
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 27 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 16 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 lowest fifth of all stocks in terms of performance over the last year.
The pharmaceutical company’s EPS Rating, a measure of profitability, is 40 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 and weight loss 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.
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