Pfizer (PFE) beat Wall Street consensus on its earnings Tuesday for the first quarter, largely boosted by the company's COVID-19 portfolio. Though the company has several new drugs in the pipeline, investors are leery on the company's outlook given its reliance on the pandemic.
"We are assuming in our model that even in a 'trough' scenario, the COVID-19 products still contribute revenues to (Pfizer). In the event both products generate lower volumes than we expect, this would present further downside to our valuation," said Goldman Sachs analysts in a note Tuesday.
Pfizer remains the only vaccine company whose stock didn't get the same boost as its balance sheet did from the pandemic, even as it enjoyed market domination globally.
CEO Albert Bourla told Yahoo Finance in an interview Tuesday he is not happy with the stock price, currently trading at about $39 per share, but knows that uncertainty spooks investors.
"The multiple that is assigned to our stock is the bottom of the range," Bourla said.
While demand for the company's COVID products is uncertain, there is also risk in the company's 2023 outlook as it prepares to launch 12 products in the second half of the year. That's because they still require FDA action and approval.
"We understand the setup: anything following Pfizer's COVID success looks like a rough patch, M&A misses loom larger than home runs. Investors may view Pfizer's risk aversion, despite >$100B deal capacity, as a frustrating miscalculation—not Merck frustrating, but frustrating nonetheless," BMO Research analysts said in a note in February, prior to the company's $43 billion acquisition of Seagan, a global biotech company that focuses on cancer research and treatments.
Bourla has noted that 2023 will be a transition year for the company's COVID-19 products, as vaccine uptake and Paxlovid treatment use will vary based on U.S. government decisions. That includes FDA's decision on when Paxlovid will be fully approved and what the needs will be for the COVID vaccine, Comirnaty.
The company, like others which benefitted from the pandemic, is seeing a reduction in its COVID-19 suite of products, which alone accounted for a significant boost to the company's bottom line in 2022, helping it achieve $100 billion in revenues for the year.
By comparison, 2023 is starting off slower, as evidenced by negotiations with the European Union and the 26% decline in COVID revenue compared to the same quarter last year. In addition, CEO Bourla said that the supply of doses that were already purchased by governments last year are expected to last through the year.
But, he said, the COVID portfolio isn't a total loss.
"Even with Comirnaty's decline, our COVID franchises remained significant contributors to the business with a combined $7.1 billion in revenues during the quarter," Bourla said on the earnings call Tuesday.
The company expects Comirnaty to provide revenues of $13.5 billion and Paxlovid to provide $8 billion in revenue for the year, and it reaffirmed its guidance for total 2023 revenues between $67 to $71 billion.
19 products in 18 months
Beyond COVID, the company reported 5% operational growth. It is awaiting an FDA decision on its RSV vaccine, for pregnant women.
Pfizer is also anticipating its new pneumococcal vaccine, Prevnar 20, which recently received FDA approval, will provide significant revenue for the year. The Prevnar product revenues totaled $6.8 billion globally last year and the newest formula is expected to dominate as it provides broader protection.
The company is reaffirming at least 19 product launches in the next 18 months in total, and expects a more robust second half of the year.
Pfizer is also working on its portfolio beyond vaccines. The company did not provide an update on its oral diabetes and weight loss drugs, which entered trials late last year, which could eventually compete with branded injectables like Novo Nordisk's (NVO) Ozempic and Wegovy and Eli Lilly's (LLY) Mounjaro.
But chief scientific officer Mikael Dolsten told Yahoo Finance that the company expects the two compounds to generate data late this year or early next year and that the company will select the most efficacious of the two to move forward.
"We think oral will allow very high efficacy...and bring this segment further into primary care," Dolsten said.
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