Is Pfizer Stock A Buy As The Company Bolsters Its Covid Vaccine Supply?
Pfizer stock is down slightly this year on a lackluster fourth-quarter report, though the company called for $15 billion in full-year Covid vaccine sales.
That followed disappointing news for Pfizer‘s (PFE) blockbuster arthritis drug Xeljanz. Xeljanz fell short of a rival medicine in a key study. Also of note, Pfizer is soon to face an advisory committee for its potential osteoarthritis pain drug, tanezumab. The committee will decide whether the benefits outweigh the drug’s risk of rapidly progressing osteoarthritis.
But Pfizer stock benefited when the company said its BioNTech (BNTX)-partnered Covid vaccine could fend off mutated forms of the virus.
Still, Pfizer stock was down 1.6% this year in midday trading on April 5.
Pfizer and BioNTech also have inked new supply deals for their vaccine. The U.S. government agreed to buy up to 300 million doses. That’s enough to inoculate 150 million people. The companies will also ship 40 million doses to COVAX, a global initiative to ensure equitable access to the Covid-19 vaccines for all countries, regardless of income levels. They also plan to send 500 million doses to Europe.
So, all things considered, is Pfizer stock a buy right now?
Pfizer Stock Fundamentals: Earnings Miss Forecasts
During the fourth quarter, Pfizer said $11.68 billion in sales grew 12% year over year. But that lagged estimates for $12.01 billion. Mizuho Securities analyst Vamil Divan noted many analysts still included Pfizer’s Upjohn business in their estimates. In November, Pfizer merged that established drugs unit with Mylan to create Viatris (VTRS).
Adjusted earnings of 42 cents per share grew 14%, but missed forecasts for 51 cents.
In the current quarter, analysts polled by FactSet expect Pfizer earnings of 78 cents a share on $13.54 billion in sales. Earnings would surge 30% and sales would rise 13%.
Big institutional investors — who account for up to 70% of all market trades — usually look for stocks with accelerating earnings and sales growth.
Further, PFE stock isn’t meshing with CAN SLIM rules for investing, which tell investors to seek stocks with year-over-year earnings-per-share increases of at least 25%. Investors should also keep an eye out for stocks with 20%-25% sales growth in the most recent quarter.
Pharmaceutical Company’s Annual Metrics
Pfizer’s sales popped 2% last year to $41.91 billion. That excluded the Upjohn unit.
But that was still off Pfizer’s last year of strong gains in 2010, when total revenue jumped 34%.
Top sellers in 2020 included cancer drug Ibrance, which generated $5.39 billion in sales, up 9%. Sales of blood thinner Eliquis, produced in a partnership with Bristol-Myers Squibb (BMY), popped 17% to $4.95 billion. Sales of Prevnar 13, a pneumonia vaccine, were flat at $5.85 billion.
Xeljanz, which is facing scrutiny for a recent post-marketing study, generated $2.44 billion, rising 9%. Vyndaqel and Vyndamax, which treat a condition that can cause heart failure, brought in $1.29 billion.
For the 2021 fiscal year, analysts surveyed by FactSet call for Pfizer to earn $3.21 a share, minus some items, up 45%. Sales are expected to pop 43% to $60.1 billion. Pfizer predicts adjusted earnings of $3.10-$3.20 per share and $59.4 billion to $61.4 billion in sales.
PFE Stock News: Xeljanz Study Hits Hard
Pfizer stock tumbled 2.9% on Jan. 27 after the company said rheumatoid arthritis drug Xeljanz failed to outperform a rival medicine in a post-marketing study. The test was performed in patients ages 50 and older at risk of a cardiovascular event, like a hear attack.
Xeljanz only had to prove it wasn’t inferior to the rival drug, known as a TNF inhibitor. That didn’t happen. Now, Pfizer said it’s working with the Food and Drug Administration to analyze the results.
The news slugged AbbVie (ABBV) too. The FDA recently requested additional safety information from AbbVie before it will consider a similar drug, Rinvoq, in patients with psoriatic arthritis and eczema.
Also in March, an FDA panel will consider whether the benefits of osteoarthritis pain drug, tanezumab, outweigh its risks. The drug has been tied to rapidly progressing osteoarthritis.
Pfizer Stock And Coronavirus Vaccine News
Pfizer expects to make 2 billion doses of the coronavirus vaccine in 2021. A number of countries — including the U.S., U.K. and Canada — have authorized the vaccine for emergency use. That was based on Phase 3 testing showing the Covid-19 vaccine was 95% effective at blocking the virus.
Further, the FDA recently said it would allow Pfizer and BioNTech to transport and store their coronavirus vaccine at more standard freezer temperatures. This is an alternative to an ultra-low temperature freezer.
Although clinical testing put the coronavirus vaccine’s effectiveness at 95%, real-world results from Israel suggest the vaccine could be at least 97% effective two weeks after the second dose. Another real-world study from the Centers for Disease Control and Prevention put the effectiveness of the Pfizer/BioNTech vaccine and Moderna (MRNA)’s similar vaccine at 90%.
The firms are also testing a third dose of their original vaccine as a booster shot, and are working to update the vaccine to target the concerning strain first identified in South Africa.
The coronavirus vaccine relies on the body’s own machinery to produce a specific substance meant to ignite an immune response. Moderna has an authorized coronavirus vaccine that uses the same messenger RNA technology. Translate Bio (TBIO) is testing one.
Moderna’s vaccine was 94.1% effective in clinical testing. Johnson & Johnson‘s (JNJ) single-shot vaccine was 66% effective. In a recent Phase 3 test, Novavax (NVAX) said its double-shot regimen was 96.4% effective against the original viral strain that causes Covid-19. AstraZeneca (AZN) said its vaccine was 76% effective in a U.S. study.
Side effects to the Pfizer vaccine have been limited in testing groups. Following either shot, 3.8% and 2% of volunteers, respectively, reported severe fatigue or headache. In the FDA’s briefing documents, the companies noted four cases of Bell’s Palsy and 64 cases of enlarged lymph nodes in vaccinated participants. U.K. health officials are investigating two allergic reactions in recipients.
Technical Analysis: PFE Stock Isn’t Forming A Base
Pfizer stock isn’t currently forming a definitive chart pattern.
Shares briefly broke out on Nov. 9 after shares topped a buy point at 39.55 out of a flat base. But Pfizer stock later fell as much as 9.4% below that entry on Nov. 17. That triggered a sell rule when shares tumble 7%-8% below their entries.
(Related: Keep tabs on chart patterns by visiting IBD’s MarketSmith.com.)
Shares of Pfizer have a poor IBD Composite Rating of 38. The 1-99 measure pits a stock’s key growth measures against all other stocks. Leading stocks tend to have CRs of 95 or better, according to IBD Digital.
Pfizer stock also has a weak IBD Relative Strength Rating of 18 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 tops just 18% of all stocks in terms of performance.
The pharmaceutical company’s EPS Rating, a measure of profitability, is a 69 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 Pfizer Stock A Buy Right Now?
Based on CAN SLIM rules of investing, PFE stock isn’t a buy right now. Shares briefly topped a buy point out of a flat base on Nov. 9, but couldn’t hold onto their gain. It’s best to buy a stock when it’s within 5% above a buy point. Pfizer stock also isn’t forming a new base.
Further, the pharmaceutical company is expected to report growth in the first quarter, but sales growth won’t be bullish enough to line up with CAN SLIM advice.
It is important to keep tabs on how Pfizer stock performs as it develops a coronavirus vaccine with BioNTech. Results appear promising so far, but it will be important to see how the company ramps its manufacturing now that it has authorization in the U.S.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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