Source: PaxForex Premium Analytics Portal, Fundamental Insight
Last week, Pfizer released its Q1 financial results. The report was strong, as the company beat analysts' expectations in both revenue and earnings. Not surprisingly, revenues from the vaccine and COVID-19 pills provided significant business growth. Pfizer confirmed its revenue forecast of $54 billion from those two products alone.
But what else is providing significant growth for the medical company? And is Pfizer too reliant on revenues from the vaccine and COVID-19 pills? Here's a quick look at the company's major products in the last quarter.
In the first three months of 2022, Pfizer generated $13.2 billion in revenue from Comirnaty and another $1.5 billion from Paxlovid. Together, COVID-19 drugs accounted for more than 57% of the company's total sales, which totaled $25.7 billion in the first quarter. Shown below are these and other drugs that brought in at least $300 million during the quarter:
Of the products listed above, the only non-COVID products that posted double-digit revenue growth were Prevnar (22%) and Vyndaqel/Vyndamax (35%).
Particularly impressive was the fact that Pfizer's COVID-19 revenue in the first quarter of this year was $14.7 billion. This is more than all of Pfizer's revenue for the same period last year ($14.5 billion). So it should come as no surprise that total vaccine sales of $14.9 billion tripled from the $4.9 billion the company reported a year ago. And while there was a 69% increase in hospital drug sales, that was only because of Paxlovid; otherwise, that segment would have shrunk from a year ago.
The company's rare disease drugs grew 17% in sales, and that was the only segment that showed more than 4% growth during the quarter.
Investing in COVID-19 stock, which has predominantly performed well over the past few years because of the pandemic, may be a risky strategy. As hospitalizations decline and COVID-19 becomes less relevant, earnings will decline. And that definitely worries Pfizer investors, as it could mean tens of billions of dollars in reduced revenue in future years if the company can't replace the revenue from COVID-19.
However, since the company made several billion in profits during the pandemic, investors shouldn't worry just yet, since the cash could open up a lot of opportunities. Although Pfizer clearly depends on COVID-19 revenues to show strong growth, the company is currently running more than two dozen Phase 3 trials.
In addition, the company's stock trades at a projected earnings ratio of seven, which is a significant discount compared to the average Health Care Select Sector SPDR Fund stock ratio, where investors pay a ratio of 16. Clearly, some of this risk is already built into the stock.
Overall, Pfizer is still a company worth watching. It has a solid track record in drug development over the years, and at a low price, it could be a solid long-term buy.
As long as the price is above the 47.80 level, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 48.59
- Take Profit 1: 50.75
- Take Profit 2: 55.00
Alternative scenario:
If the level of 47.80 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 47.80
- Take Profit 1: 45.00
- Take Profit 2: 41.00
