Pfizer A Buy Or A Sell With Covid Uncertainty Building?

 Pfizer stock is pulling back this month as analysts watch an expected pitfall this year from the company's Covid vaccine and antiviral pill.

Shares tumbled on Jan. 4 after a Bank of America Securities analyst downgraded shares of Pfizer (PFE). He expects overall sales to tumble $32 billion this year, bigger than the $23 billion decline called for by FactSet-polled analysts. A Wells Fargo analyst downgraded shares on Jan. 17, saying Pfizer needs a "Covid reset." Both downgrades came after the Food and Drug Administration authorized Pfizer's BioNTech (BNTX)-partnered booster shot for children under age 5.

But the benefits of the updated booster for younger people are still unclear. In people age 55 and older, the updated shot led to a four-fold increase in antibodies capable of handling the BA.4 and BA.5 strains of the omicron variant. But Pfizer and BioNTech didn't offer that comparison for younger people.

Other areas are looking up, though. Last month, the FDA granted a priority review for Pfizer's respiratory syncytial virus vaccine in older adults. RSV causes a respiratory illness that often impacts newborns and older adults. The FDA also recently granted Pfizer a priority review for its pneumococcal vaccine for infants and children. This would protect against respiratory viruses like pneumonia.

Pfizer is also collaborating with Clear Creek Bio on a Covid antiviral pill. If successful, it would build on Pfizer's efforts with Paxlovid. Paxlovid and Lagevrio are currently the only two authorized Covid pills. Merck (MRK) and Ridgeback Biotherapeutics make Lagevrio. Pfizer is navigating the switch from government purchasing for its existing Covid products to the commercial market.

Pfizer posted a beat-and-raise third quarter. For 2022, it expects the Covid vaccine to have brought in $34 billion, up by $2 billion from its prior outlook. The company reiterated expectations for $22 billion in Paxlovid sales. All of this came as Pfizer finished acquiring Global Blood Therapeutics and migraine assets from Biohaven Pharmaceutical (BHVN).

The company also announced plans to form a new 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

In the third quarter, Pfizer's adjusted earnings soared 40% to $1.78 per share and were well above forecasts. Sales fell 6% to $22.64 billion, but also beat expectations. The Covid vaccine, Comirnaty, and Paxlovid brought in a combined $11.92 billion in sales.

Sales of blood thinner Eliquis and pneumonia vaccine Prevnar climbed a respective 9% and 11%. But revenue from cancer treatment Ibrance fell 7% to $1.28 billion.

Overall, third-quarter sales didn't line up with CAN SLIM rules for investing. Investors are encouraged to seek stocks with 20%-25% recent sales and earnings growth. Big institutional investors — who account for up to 70% of all market trades — usually look for stocks with accelerating earnings and sales growth.

Sales are expected to rise about 3% to $24.57 billion for the fourth quarter. Analysts polled by FactSet also call for adjusted earnings of $1.06 per share, down 2 cents year over year.

Pharmaceutical Company's Annual Metrics

Pfizer's sales popped 95% to $81.29 billion in 2021. Top sellers included vaccines and its cancer treatment business. Overall, vaccine sales were $42.63 billion. Comirnaty brought in 86% of that. Cancer treatments generated $12.33 billion, up 13%.

But Pfizer's inflammation and immunology sales fell 3% to $4.43 billion. Revenue from Enbrel, an Amgen (AMGN)-partnered treatment for inflammatory conditions, tumbled 12% to $1.19 billion.

For 2022, analysts surveyed by FactSet call for Pfizer to report earnings of $6.49 a share, minus some items, up 47%. Analysts call for sales to pop roughly 24% to $100.45 billion.

Pfizer expects $99.5 billion to $102 billion in sales and adjusted earnings of $6.40-$6.50 a share. That includes $34 billion from Comirnaty and $22 billion from Paxlovid.

Pfizer Stock And Covid News

As the only company with a Covid shot and treatment, Pfizer stock is closely tied to the pandemic.

The company has adapted its original Covid vaccine to include an element targeting newer sub-variants of omicron dubbed BA.4 and BA.5. The updated booster still attempts to block the ancestral Covid strain. Recently, the FDA 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 49% of cases. BA.5 trails distantly at 2%. BA.4 no longer accounts for any cases in the country.

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 almost 27% of cases.

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 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

Last month, 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 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.

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.

Shares of Pfizer have a Composite Rating of 63 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 25 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 in the bottom quarter of all stocks in terms of performance over the last year.

The pharmaceutical company's EPS Rating, a measure of profitability, is a 93 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 CAN SLIM 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. Shares haven't broken out of a new consolidation. Further, the company isn't expected to line up with CAN SLIM advice for the fourth quarter.

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 RSV vaccine, which could hit the market at the same time as a rival from GSK (GSK).

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