Pfizer (PFE) stock is below a ceiling at its 50-day moving average after announcing its experimental vaccine was nearly 82% effective in preventing a respiratory virus in infants.
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The company tested its vaccine in pregnant women. It attempts to block respiratory syncytial virus, or RSV, which causes cold-like symptoms in most people, but can be serious or deadly in babies and older adults. In a final-phase test, the shot was 81.8% effective against RSV within 90 days of birth. By the six-month mark, the effectiveness dropped to 69.4%.
In other news, Pfizer is acquiring Seagen (SGEN) for $43 billion. Seagen works on cancer treatments known as antibody drug conjugates. These drugs send toxic chemicals directly to tumors in an attempt to limit harm to healthy tissues. 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.
Also this month, the Food and Drug Administration accepted Pfizer’s application for approval of a two-drug combination in lung cancer. Last month, Pfizer said a regimen that includes its drug Xtandi led to significantly better outcomes in men with prostate cancer.
A panel of independent FDA advisors also voted 16 to one in support of the safety and effectiveness of Covid treatment pill, Paxlovid, Pfizer said in a news release. This is a key step toward full approval.
The FDA also authorized a second dose of the omicron-blocking booster shot for people age 65 and older as well as immunocompromised people. The first booster is allowed in people age 6 months and older.
But Pfizer stock is hamstrung on its outlook. The firm calls for double-digit declines in sales of its Covid products.
All of this comes as the omicron variant continues mutating. Today, a strain called XBB.1.5 makes up close to eight in 10 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?
Pfizer Stock Fundamentals: Earnings Strong
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 Covid vaccine 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 40% to 97 cents per share in the first quarter. Sales are expected to topple 35% to $16.65 billion.
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. 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%.
Pfizer Stock And Covid News
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, and as a second dose for people age 65 and older, as well as those with immune-compromising conditions.
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 about 78% 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 1% 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.
Other PFE Stock News
This month, the FDA accepted Pfizer’s application for approval of a combination using drugs Baftovi and Mektovi in patients with a form of lung cancer marked by a genetic mutation. The FDA will make a decision on whether to approve the regimen in the fourth quarter.
Also recently, a Phase 3 test showed a combination of Pfizer’s Xtandi and a common treatment called leuprolide improved survival in men with non-metastatic prostate cancer.
In March, the FDA approved a migraine nasal spray from Pfizer called Zavzpret and an FDA panel of independent experts voted in support of Pfizer’s RSV vaccine for older adults. The panel was split, however, with seven in favor of the shot’s effectiveness and safety. Four voted against the vaccine.
The FDA is due to make a decision on older adult RSV shots from Pfizer and GSK (GSK) in May. Pfizer’s maternal vaccine is up for review in August. Moderna (MRNA) is also working on an RSV vaccine for older adults.
Technical Analysis: PFE Stock Hits 50-Day Line
Pfizer stock is trading below its 200-day moving average, and continues hitting a ceiling at its 50-day line, according to MarketSmith.com.
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 73 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 24 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 just above 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.
So, Is PFE Stock A Buy Or A Sell?
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.
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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