Source: PaxForex Premium Analytics Portal, Fundamental Insight
Pfizer's stock has faced a challenging year, experiencing a disappointing 38% decrease in performance. The company grapples with various issues, including diminishing revenues from COVID-19 products, the impending patent expiration for key drugs like Eliquis in the coming years, and uncertainties surrounding recent acquisitions.
One instance is Pfizer's acquisition of Global Blood Therapeutics and Arena Pharmaceuticals to broaden its portfolio in rare blood and autoimmune diseases. However, these assets face stiff competition, and their long-term potential may be constrained by rivals with potentially superior clinical profiles.
Despite these challenges, Pfizer's stock has notable strengths. Currently, its shares are trading at a nearly historic low based on forward-looking price-to-earnings metrics. Additionally, the annualized dividend yield has surged to an impressive 5.37% in 2023.
Moreover, there are positive developments on the horizon for Pfizer. The company is approaching a highly anticipated phase 2b trial readout for danuglipron, an orally administered glucagon-like peptide-1 receptor agonist (GLP-1-RA), targeting obese adults. Results from the trial, along with Pfizer's decision on the drug's future development, are expected to be announced before the end of the year.
Despite being positioned as a follow-on therapy to established players like Novo Nordisk's Wegovy and Eli Lilly's Zepbound, some estimates suggest that Pfizer's oral GLP-1-RA could surpass $5 billion in sales. This optimism stems from the substantial size of the global weight loss market, with projections anticipating it to exceed $100 billion by 2033.
While Novo Nordisk and Eli Lilly are expected to dominate approximately 80% of this market by the end of the decade, latecomers are still anticipated to claim a significant share, potentially reaching $20 billion or more conservatively, and even up to $40 billion by the mid-2030s in more optimistic scenarios.
In theory, positive results for danuglipron leading to the initiation of a late-stage trial could be a pivotal moment for Pfizer's stock. However, several complicating factors could dampen the market response. One major concern is that the upcoming data will pertain to the drug's twice-daily dosing, a regimen that may not be competitive in the evolving landscape later in the decade.
To address this challenge, Pfizer is working on a once-daily, modified-release version of danuglipron. However, the company appears to be awaiting additional data before making decisions on the next steps. Meanwhile, Eli Lilly is progressing with its next-generation weight loss therapy, retatrutide, which, if successful in late-stage testing, could pose a formidable challenge for Pfizer and other late entrants by potentially revolutionizing not only obesity treatment but also addressing conditions like fatty liver disease associated with excess weight.
Given the rapidly evolving competition in the weight loss medication landscape, Pfizer's stock may not experience a sustained boost from the upcoming mid-stage data. This doesn't discount the value of Pfizer's shares, but potential investors may want to consider other factors such as the company's attractive valuation, above-average dividend yield, or its broader pipeline when making investment decisions.
As long as the price is below 32.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 30.22
- Take Profit 1: 29.00
- Take Profit 2: 27.00
Alternative scenario:
If the level of 32.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 32.00
- Take Profit 1: 34.00
- Take Profit 2: 35.00
