Is Pfizer Stock A Buy Or A Sell After Confirming The Covid Cliff?

Pfizer stock is under pressure as the company braces for double-digit declines in sales of Covid products, Comirnaty and Paxlovid.

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Total revenue hit a record $100.33 billion last year. Now, Pfizer (PFE) expects sales to fall by roughly 31% this year as its Covid vaccine and antiviral pill enter the commercial market in the U.S. This means the company can no longer rely on steady U.S. government contracts. The U.S. is also set to end its Covid public health emergency in May.

All of this comes as the omicron variant continues mutating. Today, a strain called XBB.1.5 makes up more than 80% of cases in the U.S. Pfizer and partner BioNTech (BNTX) have an updated Covid booster shot targeting the B.A.4 and B.A.5 subvariants of omicron. But those two strains account for virtually no cases in the U.S. anymore.

Pfizer stock was caught up in a series of downgrades last month. One analyst called for a “Covid reset.”

Other areas are looking up, however. The Food and Drug Administration recently granted Pfizer a priority review for its respiratory syncytial virus vaccine in older adults as well as a maternal vaccine to protect newborns. The agency will decide whether to approve the adult shots from Pfizer and GSK (GSK) in May. FDA officials are also considering a new pneumonia vaccine from Pfizer.

Further, Pfizer is collaborating with Clear Creek Bio on a Covid antiviral pill, building on its Covid efforts. The company also finished acquiring Global Blood Therapeutics and migraine treatments from Biohaven (BHVN). Plus, Pfizer announced plans to form a company with Roivant Sciences (ROIV) to sell a drug currently in development for ulcerative colitis.

So, all in all, is PFE stock a buy or a sell right now?

Pfizer Stock Fundamentals: Earnings Strong

The fourth-quarter of 2022 was a mixed bag for Pfizer. Adjusted earnings soared 45% to $1.14 a share, beating expectations. But sales missed forecasts at $24.29 billion and inched up just 2%.

Sales of Covid vaccine Comirnaty declined 9% on a strict, as-reported basis to $11.33 billion, but topped expectations. Meanwhile, antiviral pill Paxlovid generated $1.83 billion, rocketing 2,313% higher but badly missing forecasts for $5.12 billion.

Pfizer’s other big moneymakers came out mixed. Sales of cancer treatment Ibrance and blood thinner Eliquis fell and missed expectations. But revenue from pneumonia vaccine Prevnar rose by a third.

Investors are encouraged to seek stocks with 20%-25% recent sales and earnings growth. Pfizer’s profit hit that mark, but sales missed. Big institutional investors — who account for up to 70% of all market trades — usually look for stocks with accelerating earnings and sales growth.

Adjusted earnings are expected to fall 37% to $1.02 per share. Sales are expected to topple 34% to $16.99 billion.

Pharmaceutical Company’s Annual Metrics

Pfizer’s sales hit a record $100.33 billion in 2022. Top sellers included Comirnaty and Paxlovid, which brought in a respective $37.81 billion and $18.93 billion.

Blood thinner Eliquis brought in $6.48 billion, up 9% on a strict, as-reported basis. Sales of pneumonia vaccine Prevnar climbed 20% to $6.34 billion.

But other key products saw downfalls. Revenue from Xeljanz, which treats inflammatory conditions, tumbled 27% to almost $1.8 billion. Xeljanz and other drugs in the same class are facing new safety concerns. Sales of 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 midpoint, earnings would tumble 49% and sales would fall 31%. Both pieces of guidance lagged Pfizer stock analysts’ expectations.

Pfizer called for $13.5 billion from Comirnaty and $8 billion from Paxlovid, down a respective 64% and 58%.

Pfizer Stock And Covid News

The company has adapted its original Covid vaccine to include an element targeting newer subvariants of omicron dubbed BA.4 and BA.5. The updated booster still attempts to block the ancestral Covid strain. The FDA also signed off on that booster for children as young as 6 months old.

But there are a couple of problems here. First, the authorizations were based on laboratory studies and human test data from an earlier 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 U.S., accounting for more than 80% of cases. BA.4 and BA.5 account for virtually no cases in the U.S.

Pfizer and BioNTech say the updated booster has triggered antibodies against newer omicron iterations, but a recent study at the University of Texas Medical Branch didn’t find a robust response against the BQ.1.1 strain, according to CNBC. That strain accounts for about 12% of cases and is in decline.

On the antiviral side, Pfizer tested Paxlovid in unvaccinated Covid patients at risk of developing severe disease. It cut down on hospitalizations by 89% when patients started treatment within three days of symptoms beginning. No Paxlovid recipients died.

The results were better than Merck (MRK) and Ridgeback’s Lagevrio, which reduced hospitalizations by 30%. One patient died.

Pfizer also is working with Clear Creek Bio on another oral antiviral.

Other PFE Stock News

Recently, Pfizer said its experimental multiple myeloma drug led to a 61% response rate in patients with relapsed cancer or cancer that didn’t respond to other treatments. The drug also proved safe in heavily pretreated patients with advanced disease.

The RSV vaccine news also sent Pfizer stock higher. With the FDA’s priority review, the vaccine for older adults could gain approval in May. It would protect against the respiratory illness in adults age 60 and older. Pfizer is also working on a maternal vaccine to prevent RSV in newborns. The FDA will review that shot in August.

In older adults, the RSV shot was almost 86% effective. Its maternal vaccine was also 81.8% effective in the first 90 days of a newborn’s life.

Recently, Pfizer and Valneva (VALN) said participants who received their Lyme disease vaccine still had virus-blocking antibodies after six months. A three-dose series outperformed a two-dose series of shots.

Technical Analysis: PFE Stock Eyes Buy Point

Pfizer stock is trading below its 200-day and 50-day moving lines, according to MarketSmith.com.

Shares are now consolidating with a buy point at 61.81.

(Related: Keep tabs on chart patterns by visiting IBD’s MarketSmith.com.)

Shares of Pfizer have a Composite Rating of 62 out of a best-possible 99. The measure weighs a stock’s key growth metrics against all other stocks. Leading stocks tend to have Composite Ratings of 95 or better, according to IBD Digital.

Pfizer stock has a Relative Strength Rating of 19 out of a best-possible 99. The RS Rating measures a stock’s 12-month running performance against all other stocks. That RS Rating means Pfizer stock ranks among the bottom one-fifth of all stocks in terms of performance over the last year.

The pharmaceutical company’s EPS Rating, a measure of profitability, is a 94 out of a best-possible 99. The EPS Rating compares a stock’s recent and longer-term earnings growth against all other stocks.

So, Is PFE Stock A Buy Or A Sell?

Based on savvy rules of investing, PFE stock isn’t a buy right now. By at least one measure, it was a sell when Pfizer stock dropped below its 50-day line.

It will be important to keep tabs on how Pfizer stock performs as Covid moves into its endemic phase and as the company expands its pipeline. Investors are closely watching the adult RSV vaccine, which could hit the market at the same time as rivals from GSK and Moderna (MRNA).

To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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