Pfizer (PFE) stock is under its key moving averages after the company announced its $43 billion plan to acquire Seagen (SGEN), a cancer specialist biotech.
Seagen makes antibody drug conjugates, or ADCs. These are toxic payloads directed to seek out specific targets on the outside of tumor cells. This limits their damage to surrounding, healthy tissue. By 2030, Pfizer expects Seagen to add at least $10 billion to its topline. This comes as Pfizer faces several patent expirations for key products.
Pfizer also said the Food and Drug Administration signed off on its BioNTech (BNTX)-partnered Covid booster shot for children under 5 years old. Further, the FDA approved Pfizer's migraine nasal spray, now called Zavzpret. An FDA panel said the safety and effectiveness of Pfizer's respiratory syncytial virus, or RSV, vaccine outweigh the risks in adults age 60 and older.
But Pfizer stock is hamstrung on its outlook. The company calls for double-digit declines in sales of its Covid products, the vaccine called Comirnaty and the antiviral pill, Paxlovid.
Total revenue hit a record $100.33 billion last year. Now, Pfizer expects sales to fall by roughly 31% this year as Comirnaty and Paxlovid 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 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 90% of cases in the U.S. Pfizer's updated Covid booster shot targets the BA.4 and BA.5 subvariants of omicron. But those two strains account for virtually no cases in the U.S. anymore.
So, all in all, is PFE stock a buy or a sell right now?
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 Comirnaty declined 9% on a strict, as-reported basis to $11.33 billion, but topped expectations. Meanwhile, 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 39% to 99 cents per share in the first quarter. Sales are expected to topple 34.5% to $16.81 billion.
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 in sales.
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' initial expectations.
Pfizer called for $13.5 billion from Comirnaty and $8 billion from Paxlovid, down a respective 64% and 58%.
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. That shot is now available as a booster for children age 6 months and older.
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 north of 90% 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 3.5% 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.
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. The agency is also considering RSV shots for older adults from GSK (GSK) and Moderna (MRNA). Further, Pfizer has a maternal vaccine under review for 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.
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.
Pfizer stock is trading below its 200-day and 50-day moving lines, according to MarketSmith.com.
Shares are not forming a chart pattern for investors to watch.
Shares of Pfizer have a Composite Rating of 66 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 17 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 95 out of a best-possible 99. The EPS Rating compares a stock's recent and longer-term earnings growth against all other stocks.
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 in January.
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.
(Source: Investors.com), all rights reserved by original source.