Pfizer (PFE) has agreed to acquire British antiviral drug developer ReViral for $525 million. PFE stock rose more than 4.3% to close at $55.16 on April 7. The New York-headquartered Pfizer is a multinational pharmaceutical company. Its portfolio includes therapies and vaccines for various diseases, and it is one of the manufacturers of COVID-19 vaccines.
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Meanwhile, ReViral is developing treatments for respiratory syncytial virus (RSV) and has several drug candidates in the pipeline. Its flagship drug candidate, sisunatovir, is in a Phase 2 study. The experimental drug has been tested in adults with promising results, and now it is being tried in infants. The FDA has granted sisunatovir the Fast Track designation to help accelerate its development process.
An Effort to Stop 160,000 Deaths Annually
RSV can cause life-threatening lower respiratory tract infections in infants and the elderly. The virus is estimated to infect about 64 million people and cause about 160,000 deaths annually.
Pfizer counts on the ReViral acquisition to bolster its infectious disease portfolio. Pfizer has been separately working on a vaccine for RSV, and the ReViral acquisition is expected to complement its efforts in combating the pathogen.
Pfizer estimates that ReViral’s programs have the potential to generate $1.5 billion in annual revenue. The global RSV drug market is expected to grow to $4.2 billion by 2027 from $1.66 billion in 2020.
Wall Street’s Take
Following the announcement of the ReViral acquisition deal, BMO Capital analyst Evan Seigerman reiterated a Buy rating on Pfizer with a price target of $76, which indicates 37.8% upside potential. According to the analyst, there is an unmet need in RSV, but said, “We would have liked to see a more impactful deal than what Pfizer announced.”
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on seven Buys versus eight Holds. The average Pfizer price forecast of $60.64 implies 9.9% upside potential to current levels. Shares have increased 32% over the past six months.
Hedge Funds
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in PFE is currently Very Positive, as 34 hedge funds increased their cumulative holdings of the stock by 8.8 million shares in the last quarter.
The Takeaway for Investors
If the ReViral acquisition goes through, then it would not only give Pfizer a deeper presence in the potentially lucrative RSV drug market, but also further diversify its portfolio.
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