by pfizer (PFE) rose in mid-May on the enthusiasm of its potential rival Novo Nordisk (NVO) and Eli Lilly (LLY) in the treatment of diabetes and weight loss.
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Pfizer tested its treatment over 16 weeks in patients with type 2 diabetes. A high dose of the pill twice a day led to about 10 kilos of weight loss. In comparison, patients who received a high dose of Novo’s weekly injection, Ozempic, lost as much in 30 weeks, according to the Phase 3 study of the drug.
But one analyst noted that Pfizer has yet to decide whether to send its twice-daily pill into final testing. The company is awaiting the results of an interim daily pill study.
Investors and patients are focusing on a range of approved and experimental drugs that lead to weight loss. They mimic a gut hormone that signals the brain when the stomach is full. They also help increase insulin production in the pancreas, improving blood sugar control.
The segment could be important for Pfizer, which is experiencing an expected decline for its Covid vaccine and oral treatment. Sales of both beat expectations in the first quarter, but the company’s outlook for the year suggests both will decline in 2023.
Pfizer has also gained approval for its RSV vaccine for older adults. Respiratory syncytial virus causes cold-like symptoms in most people, but it can be deadly in newborns and older adults. GSK (GSK) has already won approval for its shot Modern (MRNA) hopes to follow suit.
A panel of Food and Drug Administration advisors unanimously voted to support approval of Pfizer’s RSV vaccine for pregnant women. It is intended to protect newborns. But only 10 voted for the vaccine’s safety.
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 damage to healthy tissue.
In addition, the company said its hemophilia treatment reduced annualized bleeding episodes by 92%. But stocks plunged on the news.
So all in all, is PFE stock a buy now?
Pfizer Stock Fundamentals: Earnings Outpace But Fall
During the first quarter, Pfizer earned $1.23 per share, on an adjusted basis, on $18.28 billion in sales. Earnings were down 24%, while sales were down 29%. But analysts called for much steeper declines.
One analyst, however, says the pace came from better-than-expected sales of Covid products, the BioNTech (BNTX) partnership vaccine and Paxlovid oral treatment.
Comirnaty generated $3.06 billion in sales, while the antiviral pill Paxlovid brought in $4.07 billion. Both beat Wall Street’s expectations. But Comirnaty sales have fallen by 77% as demand for Covid vaccines has waned. Paxlovid sales soared 177%.
But Pfizer’s outlook for the year indicates that sales of both will decline in 2023.
Meanwhile, sales of newly acquired products Nurtec and Oxbryta – treatments for migraine and sickle cell disease – have not met expectations.
Revenue for one of Pfizer’s most notable drugs, Xeljanz, dropped 36%, as reported, to $237 million. Xeljanz treats immune conditions, but it is facing pressure after the FDA required companies with products in that class to add a new warning label to the prescription.
sales of Bristol Myers Squibb The anticoagulant Eliquis, partner of (BMY), rose 5% to $1.87 billion. But Eliquis will lose market exclusivity in the coming years.
For the current quarter, analysts forecast Pfizer’s adjusted earnings of 62 cents a share on $13.73 billion in sales. Earnings would drop 70% and sales would drop 51%.
Investors are encouraged to look for stocks with recent sales and earnings growth of 20% to 25%. Pfizer is not hitting those marks. Large institutional investors – who account for up to 70% of all market transactions – often look for stocks with fast earnings and sales growth.
Pharmaceutical company annual metrics
Pfizer’s sales reached a record $100.33 billion in 2022. Top sellers included Comirnaty and Paxlovid, which grossed $37.81 billion and $18.93 billion in sales respectively.
Blood thinner Eliquis raised $6.48 billion, up 9% on a strict basis, as reported. Sales of the pneumonia vaccine Prevnar rose 20% to $6.34 billion.
But other major products saw declines. Revenue from Xeljanz, which treats inflammatory conditions, fell 27% to nearly $1.8 billion. Sales of the cancer drug Ibrance also fell 6% to $5.12 billion.
For 2023, Pfizer expects adjusted earnings of $3.25 to $3.45 per share and $67 billion to $71 billion in sales. At the midpoint, earnings would drop 49% and sales would drop 31%. Pfizer expects $13.5 billion from Comirnaty and $8 billion from Paxlovid, down 64% and 58% respectively.
Pfizer stocks and Covid news
The company adapted its original Covid vaccine to include an element targeting newer omicron subvariants dubbed BA.4 and BA.5.
The updated booster still tries to block the ancestral strain of Covid. This shot is now available as a booster for children 6 months and older and as a second dose for people 65 years and older, as well as for people with immunocompromised conditions.
But there are some problems here. First, the authorizations were based on laboratory studies and human test data from an earlier iteration of the omicron lock booster.
Second, the new booster shot blocks a version of the omicron that is now less dominant. According to the Centers for Disease Control and Prevention, a new subvariant called XBB.1.5 is now dominant in the US, accounting for about 54% of cases. BA.4 and BA.5 represent virtually no cases in the US
Pfizer and BioNTech say the updated booster triggered antibodies against newer omicron iterations, but a University of Texas Medical Division study did not find a robust response against the BQ.1.1 strain, according to CNBC. This strain accounts for a fraction of cases and is on the decline.
On the antiviral side, Pfizer has tested Paxlovid in unvaccinated Covid patients at risk of developing severe disease. It reduced hospitalizations by 89% when patients started treatment three days after symptom onset. No Paxlovid recipients died.
Pfizer is also working with Clear Creek Bio on another oral antiviral.
Other PFE stock news
Pfizer tested an injection under the skin to treat hemophilia A and B. The drug led to a 92% reduction in annualized bleeding rates compared with a 35% drop for patients receiving standard treatments. But one analyst says the mechanism Pfizer is using could lead to clotting problems in a larger study.
US regulators recently approved Pfizer’s pneumococcal vaccine for infants and children. It tries to block 20 strains that cause pneumococcal disease. The best known pneumococcal disease is pneumonia.
In a recent study, Pfizer said that a combination of its drug Xtandi and another anti-cancer drug called leuprolide reduced the risk of the cancer spreading or death by 58% in men with prostate cancer versus placebo and leuprolide. But the news didn’t help Pfizer shares, which have fallen sharply since December.
The FDA also accepted Pfizer’s application for approval of a combination drug using Baftovi and Mektovi in patients with a form of lung cancer marked by a genetic mutation. The FDA will make a decision on approving the regimen in the fourth quarter.
In March, the FDA approved a migraine nasal spray from Pfizer called Zavzpret, and an independent FDA expert panel voted in favor 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.
Technical Analysis: PFE stock hits 50-day line
Pfizer shares are trading below their 50-day and 200-day moving averages, according to MarketSmith.com.
Stocks are not forming a chart pattern for investors to watch.
(Related: Keep an eye out for chart patterns by visiting IBD’s MarketSmith.com.)
Pfizer stock has a composite rating of 69 out of a maximum of 99. The measure weighs a stock’s key growth metrics against all other stocks. Top stocks tend to have composite ratings of 95 or higher, according to IBD Digital.
Pfizer stock has a relative strength rating of 26 out of a maximum of 99. The RS rating measures a stock’s continuous 12-month performance relative to all other stocks. This RS rating means that Pfizer stock is just north of the lowest quarter of all stocks in terms of last year performance.
The pharmaceutical company’s EPS score, a measure of profitability, is 88 out of a maximum of 99. The EPS score compares a stock’s recent and long-term earnings growth to all other stocks.
So is PFE stock a buy?
Based on smart investment rules, PFE stock is not a buy at this time. By at least one measure, it was a sell off as Pfizer shares dipped below its 50-day line in January. Stocks that fall below this key line often experience downward pressure at this ceiling.
It will be important to track how Pfizer stock performs as Covid enters 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 GSK and Moderna. The diabetes pill is more overdue, but it could also be a major contributor to Pfizer.
To find the best stocks to buy and watch, check out the IBD Stock Lists. Also make sure you keep tabs on which stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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