Pfizer (PFE) will need to see more growth from treatments other than its COVID-19 vaccines and antivirals as an anticipated wave of cases has failed to materialise, Reuters reports.
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The pharmaceutical giant, which led the effort to produce a vaccine for COVID-19 at record speed in 2020, is seeing declining sales volumes from its blockbuster drugs designed to prevent and treat the illness.
The company, and its CEO Albert Bourla, are under pressure after the stock declined 55% from its pandemic high, with many investors concerned that it did not effectively deploy its massive windfall from COVID-19. Bourla has been criticized for pursuing costly mergers and delivery poor returns for shareholders.
Activist investor Starboard Value went public with a $1 billion stake in October and is pushing for a shakeup at PFE. Sluggish COVID-19 sales could supply more ammunition to the activist, which has pointed out that the company has shed $20 billion in value despite getting a $40 billion boost from COVID-19 suite of drugs.
According to Reuters, emergency visits across the U.S. with diagnosed COVID-19 have fallen sharply over the first three weeks of the year. Even on January 1st, when cases peaked, just 1.4% of emergency visits were with COVID-19, down from 3.4% a year ago.
It adds pressure to a declining sales outlook for its key COVID-19 drugs. The antiviral Paxlovid and the COVID vaccine will account for 16% of PFE’s total revenue in its 2024 Fiscal year, before declining to 13% of 2025 revenue.
PFE Faces White House Pressure
It comes as the vaccine industry faces renewed pressure from the White House. Robert F Kennedy Jr., Trump’s pick for health secretary, has distanced himself from being “anti-vaccine”, instead telling lawmakers during his confirmation hearing that instead he is in favor of safety.
Truist analyst Srikripa Devarakonda suggested that this is a contradiction to his legacy of anti-vaccine involvement.
“Given early comments which seem more muted and given his history, we question if the verbiage during hearing could ultimately be contradicted later if he is sworn into office,” says Devarakonda.
RFK Jr. has been outspoken against vaccines but “his bark may be bigger than his bite,” according to Truist.
PFE Earnings Coming Up
That may be good news for PFE in the long run, but for the moment the focus is on Fiscal fourth-quarter earnings due on Tuesday, February 4th, before the market open. Analysts expect earnings per share of $0.46 on $17.4 billion in revenue.
In the Q3 update Pfizer raised its full-year 2024 revenue guidance to a range of $61 billion to $64 billion, with COVID-19 product revenues expected at $10.5 billion.
However, the lack of an expected wave of cases in the winter may leave PFE short of where it expected to be.
Is PFE a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on PFE, based on seven Buys, 10 Holds and one Sell. With an average PFE price target of $30.40 analysts see about 15% of upside potential from current levels.
