Source: PaxForex Premium Analytics Portal, Fundamental Insight
Summing up Pfizer's recent stock performance in just three letters: ugh. The pharmaceutical giant has witnessed a more than 50% drop in shares since reaching a peak in late 2022. The company's financials, including revenue and earnings, are on a downward spiral, presenting significant hurdles for its future.
Despite the prevailing pessimism surrounding Pfizer, many hold a bullish outlook for the long term. However, it's crucial to acknowledge the valid reasons behind the gloom hovering over the company. The once thriving COVID-19 franchise has taken a hit, with combined sales of the Comirnaty vaccine and Paxlovid antiviral pill expected to be around $8 billion in 2024, a sharp decline from the $37.8 billion generated in 2022 and approximately $12.5 billion in 2023.
Compounding Pfizer's challenges are looming patent expirations for key products before the end of the decade. A glance at the table below illustrates the magnitude of the issue:
Pfizer patent expirations
While the sales for these products won't vanish overnight post-patent expiration, Pfizer anticipates an annual revenue reduction of approximately $17 billion by 2030 due to the loss of exclusivity. Coupled with the diminishing demand for COVID-19 products, it's understandable why many perceive Pfizer to be grappling with formidable challenges.
Despite the barrage of negative news, most analysts are optimistic about Pfizer's future, a sentiment shared by the company's management. Pfizer CEO Albert Bourla, speaking at the JPMorgan Healthcare Conference, highlighted the expectation that the usage of its COVID-19 products in 2024 will mirror the levels seen in 2023. While the guidance for the current year is more conservative, 2024 may be a trough year for the pharmaceutical giant's COVID-19 sales.
Bourla also revealed Pfizer's ongoing development of a combination COVID/flu vaccine, emphasizing its potential significance, especially among younger demographics with low COVID-19 immunization rates. Addressing the looming negative impact on revenue from products losing exclusivity, Pfizer has been proactively executing a strategy to counter this issue. Substantial investments in research and development, coupled with significant expenditures on business development deals, have been pivotal in this effort.
The company envisions offsetting the revenue loss from products losing exclusivity by 2030 through new product launches, expanded indications for existing products, and additional business development deals. As a result, Pfizer anticipates a non-COVID revenue compound annual growth rate of nearly 10% between 2025 and 2030.
Drawing inspiration from Ronald Reagan's "Trust but Verify," investors are wise to scrutinize management projections. Still, Pfizer's projections for a brighter future are credible. The anticipation of 2024 as a trough year for COVID-19 revenue aligns with the resolution of uncertainties, the transition to a commercial business model, and the resolution of overstocking issues in 2023.
Bourla's assertion that the younger demographic presents a significant opportunity for Pfizer's COVID-19 combo vaccine holds promise. Younger individuals, more inclined to get a flu vaccine, could find appeal in a single injection protecting against both flu and COVID-19. The potential moderate sales boost from this combo vaccine is plausible.
Pfizer's goal of generating $45 billion in new revenue by 2030 appears realistic. The company has already launched impactful products like the multiple myeloma drug Elrexflo and the respiratory syncytial virus (RSV) vaccine Abrysvo. Additionally, strategic business development deals, such as the acquisition of Biohaven, have enriched Pfizer's product portfolio and pipeline, featuring promising candidates like Nurtec and Zavzpret for migraines and blood cancer therapies from the Seagen acquisition.
As long as the price is below 30.00, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 27.34
- Take Profit 1: 25.85
- Take Profit 2: 23.00
Alternative scenario:
If the level of 30.00 is broken-out, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 30.00
- Take Profit 1: 32.00
- Take Profit 2: 34.00
