by Pfizer (PFE) stock capped higher in mid-May on enthusiasm for its potential rival Novo Nordisk (NVO) and Eli Lilly (LLY) in diabetes management and weight loss.
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Pfizer tested its treatment for 16 weeks in patients with type 2 diabetes. A high dose of the twice-daily pill led to about 10 kilograms of weight loss. In comparison, patients who received a high dose of Novo’s weekly injection, Ozempic, lost that much over 30 weeks, according to the drug’s Phase 3 trial.
But one analyst noted that Pfizer has yet to decide whether to send its twice-daily pill to the final stage of testing. The company is awaiting the results of an interim study of a once-a-day pill.
Investors and patients are targeting a range of approved and experimental drugs that lead to weight loss. They mimic a gut hormone that sends signals to the brain when the stomach is full. They also help increase insulin production in the pancreas, helping to better control blood sugar levels.
The segment could be important for Pfizer, which is experiencing an expected decline for its Covid vaccine and oral treatment. Sales of both beat expectations in the first quarter, but the company’s outlook for the year suggests that both will tumble in 2023.
Pfizer also received approval for its RSV vaccine for older adults. Respiratory syncytial virus causes cold symptoms in most people, but can be fatal in newborns and older adults. GSK (GSK) has already received approval for its shot Moderna (MRNA) hopes to follow suit.
A panel of advisors from the Food and Drug Administration voted unanimously to approve Pfizer’s RSV vaccine for pregnant women. It is intended to protect newborns. But only 10 voted for the safety of the vaccine.
In other news: Pfizer is taking over sea (SGEN) for $43 billion. Seagen is working on cancer treatments known as antibody conjugates. These drugs send toxic chemicals directly to tumors in an attempt to limit damage to healthy tissues.
Furthermore, the company said that the hemophilia treatment reduced annual bleeding episodes by 92%. But stocks sank on the news.
So, all in all, is PFE stock a bargain right now?
Pfizer Stock Fundamentals: Beat Earnings, But Decline
During the first quarter, on an adjusted basis, Pfizer earned $1.23 per share on revenue of $18.28 billion. Profits fell 24% while sales plummeted 29%. But analysts argued for much steeper declines.
However, one analyst says the beat was due to better-than-expected sales of Covid products, the BioNTech (BNTX)-partnered vaccine and oral treatment Paxlovid.
Comirnaty generated sales of $3.06 billion, while the antiviral pill Paxlovid brought in $4.07 billion. Both exceeded Wall Street expectations. But Comirnaty sales fell 77% as demand for Covid vaccines declined. Paxlovid’s sales skyrocketed by 177%.
But Pfizer’s outlook for the year indicates sales of both will fall in 2023.
Meanwhile, sales of the newly acquired products Nurtec and Oxbryta – treatments for migraine and sickle cell anemia – exceeded expectations.
Sales of one of Pfizer’s most notable drugs, Xeljanz, fell 36% on a reported basis to $237 million. Xeljanz treats immunological disorders but is under pressure after the FDA required companies with products in this class to add a new warning label to the prescription.
Sale of Bristol Myers Squibb (BMY)-collaborative blood thinner Eliquis climbed 5% to $1.87 billion. But Eliquis will lose market exclusivity in the coming years.
In the current quarter, analysts are calling for adjusted Pfizer earnings of 62 cents per share on $13.73 billion in revenue. Profits would plummet by 70% and sales by 51%.
Investors are encouraged to look for stocks with recent sales and earnings growth of 20%-25%. Pfizer doesn’t get those points. Large institutional investors – representing up to 70% of all market transactions – typically look for stocks with faster earnings and revenue growth.
Annual pharmaceutical company statistics
Pfizer’s sales reached a record $100.33 billion in 2022. Top sellers included Comirnaty and Paxlovid, which brought in $37.81 billion and $18.93 billion in sales, respectively.
Blood thinner Eliquis brought in $6.48 billion, up 9% on a strict as reported basis. Sales of the pneumonia vaccine Prevnar rose 20% to $6.34 billion.
But other important products experienced decline. Sales at Xeljanz, which treats inflammatory conditions, fell 27% to nearly $1.8 billion. Sales of the cancer drug Ibrance also fell 6% to $5.12 billion.
For 2023, Pfizer expects adjusted earnings of $3.25-$3.45 per share and $67 billion to $71 billion in sales. At the halfway mark, revenues would be down 49% and revenues would be down 31%. Pfizer expects $13.5 billion from Comirnaty and $8 billion from Paxlovid, 64% and 58%, respectively.
Pfizer Shares and Covid News
The company has modified its original Covid vaccine to include an element targeting newer sub-variants of omicron called BA.4 and BA.5.
The updated booster is still trying to block the Covid ancestral strain. That shot is now available as a booster for children 6 months and older, and as a second dose for people 65 and older, as well as those with immune-compromising conditions.
But there are some problems here. First, the authorizations were based on lab studies and human test data from a previous iteration of the omicron-blocking booster.
Second, the new booster shot blocks a version of omicron that is now less dominant. According to the Centers for Disease Control and Prevention, a newer subvariant called XBB.1.5 is now dominant in the US, accounting for about 54% of cases. BA.4 and BA.5 account for virtually no cases in the US
Pfizer and BioNTech say the updated booster activated antibodies against newer omicron iterations, but a study at the University of Texas Medical Branch found no robust response against the BQ.1.1 strain, according to CNBC. That strain accounts for a fraction of cases and is decreasing.
On the antiviral side, Pfizer tested Paxlovid in unvaccinated Covid patients who were at risk of developing serious illness. It reduced hospital admissions by 89% when patients started treatment within three days of the onset of symptoms. No Paxlovid recipients have died.
Pfizer is also collaborating with Clear Creek Bio on another oral antiviral.
Other PFE stock news
Pfizer tested an injection under the skin for the treatment of hemophilia A and B. The drug led to a 92% drop in bleeding rates year-over-year compared to a 35% drop for patients receiving standard treatments. But one analyst says the mechanism Pfizer is using could lead to clotting problems in a larger study.
US regulators recently approved Pfizer’s pneumococcal vaccine for infants and children. It tries to block 20 strains that cause pneumococcal disease. The most well-known pneumococcal disease is pneumonia.
In a recent study, Pfizer said a combination of its drug Xtandi and another cancer drug called leuprolide reduced the risk of cancer spread or death by 58% in men with prostate cancer versus a placebo and leuprolide. But the news didn’t help Pfizer stock, which has fallen largely since December.
The FDA also accepted Pfizer’s application for approval of a combination of the drugs Baftovi and Mektovi in patients with a form of lung cancer characterized by a genetic mutation. The FDA will make a decision in the fourth quarter on whether to approve the regimen.
In March, the FDA approved a Pfizer migraine nasal spray called Zavzpret, and an FDA panel of independent experts voted in favor of Pfizer’s RSV vaccine for older adults. However, the panel was split seven in favor of the shot’s effectiveness and safety. Four voted against the vaccine.
Technical Analysis: PFE Stock Reaches 50-Day Line
According to MarketSmith.com, Pfizer stock is trading below its 50-day and 200-day moving averages.
Stocks are not a chart pattern for investors to look at.
(Related: Monitor chart patterns by visiting IBD’s MarketSmith.com.)
Pfizer shares have a composite rating of 69 out of the best possible 99. The measure weighs a stock’s key growth metrics against all other stocks. Leading stocks usually have a composite rating of 95 or higher, according to IBD Digital.
Pfizer stock has a relative strength rating of 26 out of the best possible 99. The RS rating measures a stock’s 12-month run performance against all other stocks. That RS rating means that Pfizer’s stock is just north of the all-stock’s lowest quarter in terms of past year’s performance.
The pharmaceutical company’s EPS rating, a measure of profitability, is an 88 out of a best possible 99. The EPS rating compares a stock’s recent and longer-term earnings growth to all other stocks.
So, is PFE stock a buy?
Based on smart investing rules, PFE stock is currently not a buy. By at least one measure, it was a sell when Pfizer stock dipped below the 50-day line in January. Stocks that fall below that key line often experience downward pressure near that ceiling.
It will be important to monitor how Pfizer stock performs as Covid enters the endemic phase and the company expands its pipeline. Investors are keeping a close eye on the adult RSV vaccine, which could hit the market alongside rivals GSK and Moderna. The diabetes pill lags further behind, but can also make an important contribution to Pfizer.
Check out the IBD Stock Lists to find the best stocks to buy and view. Be sure to also keep an eye on the stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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