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Is Pfizer Stock A Buy After The FDA Approved Its Updated Covid Shot?

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The Food and Drug Administration signed off on Pfizer‘s (PFE) BioNTech (BNTX)-partnered Covid booster in mid-September, but Pfizer stock remains below its 50-day moving average.




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The vaccine blocks the XBB.1.5 subvariant of omicron. Today, that strain accounts for only 2.2% of all sequenced Covid cases in the U.S. But Pfizer says its updated shot can also take on leading and worrisome variants, including eris and pirola. The FDA fully approved the vaccine for people age 12 and older, and authorized its use in children age 6 months to 11 years old.

But demand will be key. Just 17% of all people in the U.S. received one of the first updated Covid shots from Pfizer and rival Moderna (MRNA). Analysts continue to expect steep declines for both Pfizer’s Comirnaty and Moderna’s SpikeVax.

That trend played out in the second quarter when Pfizer’s sales tumbled by half and missed views. Adjusted earnings also tumbled, but beat expectations by a penny. Excluding the impact of the Covid vaccine and antiviral pill Paxlovid, sales grew 5% operationally.

Pfizer also recently scrapped development of a once-daily pill for patients with type 2 diabetes after discovering the drug led to elevated liver enzymes. Pfizer is moving ahead with a twice-daily pill, though that puts it at a disadvantage to market leaders Novo Nordisk (NVO) and Eli Lilly (LLY).

In positive news, the FDA has approved Pfizer’s treatments for multiple myeloma, a pediatric hormone deficiency disorder and severe alopecia areata, as well as vaccines to protect older adults and newborns from respiratory syncytial virus, or RSV. RSV usually causes cold-like symptoms, but can be serious or deadly in older adults and newborns.

Still, Pfizer stock has slouched 37% this year. But Pfizer is feverishly buying new companies. It’s spending $43 billion to acquire cancer treatment specialist Seagen (SGEN).

In other deals, Pfizer bought Biohaven Pharmaceuticals for its migraine assets, including Nurtec, and Global Blood Therapeutics for its sickle cell disease treatment. Biohaven (BHVN) has since relaunched to focus on other elements of its pipeline. Pfizer also invested $25 million in Caribou Biosciences (CRBU).

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

Pfizer Stock Fundamentals: Earnings Beat, But Slide

In the second quarter, Pfizer earned 67 cents per share, beating forecasts by a dime. But earnings fell 67% year over year. Sales missed projections at $12.73 billion and declined 54%.

Revenue from Comirnaty plummeted 83% to $1.49 billion and Paxlovid sales crashed 98% to $143 million. Sales of the Covid vaccine beat projections, while the antiviral pill missed.

Other products also were mixed. Sales of pneumococcal vaccine Prevnar declined 3% to $1.93 billion and missed forecasts. Sales from blood thinner Eliquis, partnered with Bristol Myers Squibb (BMY), eked out 1% growth at $1.76 billion. Eliquis is facing generics.

But heart-disease treatment Vyndaqel saw a 42% jump to $782 million in sales. Revenue from cancer drug Ibrance and inflammatory medicine Xeljanz topped forecasts, though Ibrance sales skidded 6% to $1.25 billion.

In the current quarter, analysts call for adjusted Pfizer earnings of 63 cents per share on $14.88 billion in sales. Earnings would plummet 65% and sales would fall about 34%.

Investors are encouraged to seek stocks with 20%-25% recent sales and earnings growth. Pfizer is not hitting those marks. Big institutional investors — who account for up to 70% of all market trades — usually look for stocks with accelerating earnings and sales growth.

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 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. 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 $70 billion in sales. At the midpoint, earnings would tumble 49% and sales would fall 32%. Pfizer expects $13.5 billion from Comirnaty and $8 billion from Paxlovid, down a respective 64% and 58%.

Pfizer Stock And Recent News

The FDA signed off on updated Covid vaccines from Pfizer and Moderna, but hasn’t said anything yet about the Novavax (NVAX) shot. All three shots aim to block the XBB.1.5 strain, though today the dominant strain is called EG.5, or eris. From Sept. 3 to Sept. 16, it accounted for 24.5% of sequenced Covid cases.

Pfizer is also eyeing the obesity treatment landscape. Over 16 weeks, patients who took a high dose of Pfizer’s twice-a-day pill lost roughly 10 pounds. In comparison, people who received a high dose of Novo’s Ozempic shot lost that much over the course of 30 weeks, according to the company’s Phase 3 study.

But Pfizer had to scrap its once-daily pill in testing due to elevated liver enzymes. The company says it’s working on a new formulation that could be a once-daily pill.

Investors and patients are zeroing in on a series of approved and experimental drugs that lead to weight loss. They mimic a gut hormone that signals to the brain when the stomach is full. They also help increase insulin production in the pancreas, improving blood sugar control.

Pfizer also tested an under-the-skin shot for hemophilia A and B treatment. The drug led to a 92% cut in annualized bleeding rates compared to a 35% drop for patients who received standard treatments. But an analyst says the mechanism Pfizer is using could lead to clotting problems in a bigger study.

Technical Analysis: PFE Stock Hits 50-Day Line

Pfizer stock is trading well below its 200-day moving average and 50-day line, according to MarketSmith.com. It’s important to note, shares are not forming a chart pattern for investors to watch.

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

Shares of Pfizer have a Composite Rating of 35 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 16 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 lowest one-fifth of all stocks in terms of performance over the last year.

The pharmaceutical company’s EPS Rating, a measure of profitability, is 61 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. The company’s fundamental and technical metrics still need some work. Also, Pfizer stock isn’t forming a chart pattern with a clear entry for investors.

By one metric, shares could be considered a sell after they dropped definitively below their 50-day moving average in January. Shares have tried to retake that line, but only briefly succeeded.

It will be important to keep tabs on how Pfizer stock performs as the company shores up its pipeline and moves beyond the astronomical growth it saw at the height of the pandemic.

Investors are closely watching the adult RSV vaccine, which could hit the market at the same time as a rival from GSK (GSK). The diabetes and weight loss pill is further behind, but could also be an important contributor for Pfizer.

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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