And, when viewed over a three-year horizon, the company has taken a blow to its balance sheet, too. The last fiscal year saw revenue of $41.9bn, compared to $53.6bn three years ago. In the same time frame, its operating income has fallen from $15.7bn to $10.1 bn. Its EPS has fared slightly better, only taking a 16-cent hit from $1.87 to $1.71 per share. Currently, Pfizer is trading with a forward 12-month P/E of 10.28.
Looking at these numbers, it seems there’s not much going for Pfizer as a long-term investment. But numbers alone can be deceptive – and it’s important to know the story behind them if you’re looking for a profitable buy-in point.
That’s why Q.ai’s deep learning AI (artificial intelligence) is here to help you navigate the market. We provide a number- and intelligence-based look at every company – so you don’t have to do the digging yourself.
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Pfizer (PFE): Past Performance and Future Expectations
Pfizer has underperformed the market consistently in four of the past five years (though it did manager to beat the broad market index in 2018). But as they say, past performance does not always indicate future results, and Pfizer is making moves to expand their growth potential and push their stock to greater heights.
The company started by offloading many of its older, poorly performing drugs with expired or expiring patents, including Lyrica, to a new company called Viatris. Since dumping these burgeoning burdens, Pfizer has projected risk-adjusted revenue growth of 6% annually for years to come – and that prediction doesn’t include profits from their Covid-19 vaccine, Comirnaty.
During their fourth quarter conference call, CFO Frank D’Amelio noted that Pfizer expects to see a minimum of $15bn in Comirnaty (BNT162b2) profits over the next two years. But this number was based on their supply deals at the time. Since then, the United States government alone has increased their contract by 100 million doses, and Pfizer expected to produce a significant portion of the 500 million doses both it and Moderna pledged to U.S. vaccination efforts by the end of July. 120 million of these doses are expected to be delivered by late March.
Vaccine Research Injects Optimism into Global Inoculation Efforts
There’s more good news for Pfizer on the vaccine front, too.
Two studies released on February 8 out of Israel showed that Pfizer’s vaccine doesn’t just prevent infection in vaccinated individuals – it reduces transmission, too. A third study out of Israel’s Clalit Health Services Research Institute showed that Pfizer’s vaccine was effective in preventing infection and deaths at all ages. This 1.2-million-person study found an encouraging 94% drop in symptomatic infections and a 92% decline in seriously ill Covid-19 patients in vaccinated individuals.
A fourth study published on February 9 by a research team at the University of Oxford also showed that Pfizer’s vaccine produced a non-negligible immune system response against both the U.K. and the South African variants of the virus.
While most of these studies have not yet been peer-reviewed, the emerging data is encouraging. So…why is Pfizer trading down in the market?
Potential Changes in Dose Administration Could Hurt Bottom Line
Some of the blame for Pfizer’s falling stock price this week may fall to a paper published in the New England Journal of Medicine by Covid-19 researchers Danuta Skowronski and Gaston De Serres.
In their article, Skowronski and De Serres argue that documents submitted to the FDA suggest the first dose of Pfizer’s vaccine is 92.6% effective against the virus. The second dose, which Pfizer recommends receiving 4 to 6 weeks after the first, only raises efficacy to 94.8%. As such, the paper argues, “the benefits derived from a scarce supply of vaccine could be maximized by deferring second doses until all priority group members are offered at least one dose.”
In other words, given the state of urgency around delivering vaccines (which are in short supply) to throngs of unvaccinated people eager to return to some semblance of normalcy (which are not), the government should push for a single-dose schedule until most people have received at least one injection.
Pfizer responded that they would leave such recommendations up to health authorities. They also cautioned that responsible parties should “conduct surveillance on implemented alternative dosing schedules to ensure that vaccines provide the maximum possible protection.”
In theory, adhering to the proposed guidelines could effectively increase the rate of inoculation with minimal ramifications. But whether they will be adopted – as well as their potential effects on Pfizer’s bottom line – remains to be seen.
Pfizer’s Drug Failures
Knowing why Pfizer is trading down this week is well and good, but it’s worth noting that Pfizer has been falling for the better part of six months. Some of this recent performance can be attributed to disappointing results from studies on their other drugs.
For instance, in October, the company reported that its breast cancer drug Ibrance failed to meet its goal of preventing cancer recurrence in high-risk, early-stage patients following surgery. This is the second time in a year that Ibrance has taken a hit; it failed a similar study in May of 2020. Though Ibrance still commands a significant market share for some advanced stage cases, Pfizer’s numbers are certain to drop in the coming months.
A second blow came from Xeljanz, an anti-inflammatory drug that treats some autoimmune disorders. This drug has been under scrutiny for over a year, after reports surfaced in 2019 that Xeljanz could increase the risk of blood clots and death. Additional safety studies from the past year also indicate an increased risk of heart attacks and cancer.
What’s Our Take on the Situation?
At the end of the day, there’s not one big reason that Pfizer is consistently trading down – just a bunch of little reasons leading to a long-term downward trend. So, with all these considerations under our belt, let’s take a look at what Q.ai has to say.
Upon crunching the data, our AI has come up with a disappointing report for Pfizer: the company rated B in Low Volatility Momentum, C in both Quality Value and Technicals, and D in Growth.
With a year of shaky performance behind it, both in the stock market and the medical world, we’ve determined that there’s too much chance and guesswork in their immediate future to be worth a buy. It looks like the best Pfizer will receive from Q.ai is a Neutral rating for the month of February.
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