Pfizer stock took a spill in February after the company’s 2022 guidance lagged forecasts despite bullish Comirnaty and Paxlovid sales in the fourth quarter.
For the year, the company expects $98 billion to $102 billion in sales. Its Covid shot, Comirnaty, and an antiviral treatment called Paxlovid are expected to bring in a combined $54 billion of that. Pfizer (PFE) also guided to adjusted profit of $6.35-$6.55 per share, also lagging expectations.
Shares of Pfizer have been under pressure recently. The company backed out of a heart-disease drug development deal with Ionis Pharmaceuticals (IONS) in late January. The companies were working to lower a type of fat in the blood called triglycerides. Their drug cut the level of triglycerides, but it increased liver enzymes.
Further, Moderna (MRNA) gained full U.S. approval for its rival Covid vaccine, known as Spikevax. This means Moderna’s shot can remain on the market after the pandemic ends, giving Pfizer and BioNTech (BNTX) a long-term competitor.
The Food and Drug Administration also rejected Pfizer’s drug for growth hormone deficiency in children. The FDA also rejected a Merck (MRK) treatment for unexplained chronic coughing, leading to a broad dive for pharma stocks.
On a bullish note, Pfizer inked a deal with Beam Therapeutics (BEAM) to test a newer form of gene editing. They will collaborate on three diseases of the liver, muscles and central nervous system. Pfizer will pay Beam $300 million up front and up to $1.05 billion in milestone payments.
Pfizer forged deals with Codex DNA (DNAY) and privately held Acuitas Therapeutics for technology that could bolster its messenger RNA efforts. Further, it’s acquiring Arena Pharmaceuticals (ARNA) for $6.7 billion. Arena is testing treatments for immuno-inflammatory diseases.
Meanwhile, Pfizer and BioNTech say three doses of their Covid shot can help block omicron infections. Two doses could still help prevent severe disease. The booster shot is available to people as young as 12 beginning five months after the second dose.
So, all in all, is PFE stock a buy?
Pfizer Stock Fundamentals: Earnings Strong
In the fourth quarter, adjusted Pfizer earnings were $1.08 per share on $23.84 billion in sales. Earnings skyrocketed 152% and sales surged 105%. But the metrics were mixed with only profit beating analysts’ estimates.
Comirnaty generated $12.5 billion in sales, topping forecasts. Paxlovid brought in $76 million in sales, below broad calls for $143 million.
Revenue from blood thinner Xeljanz beat projections at $1.5 billion, up 19%. Sales of Xeljanz, a treatment for inflammatory conditions, and a heart-disease drug, Vyndamax, also came in above expectations at, respectively, $721 million and $561 million.
But sales of Pfizer’s biggest cancer drug, Ibrance, fell 3% to $1.39 billion. Revenue from Prevnar, a pneumonia vaccine, also lagged at $1.3 billion. Sales fell 26% due to the timing of government orders, according to one analyst.
Overall, total fourth-quarter growth lined up with CAN SLIM rules for investing. Investors are encouraged to seek stocks with 20%-25% recent sales and earnings growth. But excluding the impact of the Covid products, sales fell 2%.
Big institutional investors — who account for up to 70% of all market trades — usually look for stocks with accelerating earnings and sales growth.
That trend is expected to continue in the current quarter. Analysts polled by FactSet call for adjusted income of $1.50 a share and $24.56 billion in sales, rising a respective 61% and 68%.
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 $6.71 a share, minus some items, up nearly 52%. Analysts call for sales to pop 27% to $103.18 billion.
Pfizer Stock And Coronavirus Vaccine News
Pfizer and BioNTech are working on an omicron-specific vaccine that could launch in March, if needed. A study out of Israel recently suggested a fourth dose of the vaccine did little to protect against omicron-induced cases of Covid. The companies still plan to make 4 billion doses of their original vaccine in 2022.
The FDA recently said people age 12 and up can now receive Pfizer’s booster shot beginning five months after their primary series. Boosters from Moderna and Johnson & Johnson (JNJ) are available to adults six months and two months, respectively, after their primary series.
Pfizer is also seeking full approval for its vaccine in adolescents age 12-15. As it stands, the shot is fully approved only for age 16 and older, but it’s authorized for children as young as 5. The shot for children age 5-11 is one-third the dosage given to older children, teens and adults.
The company is also testing a one-tenth sized dose in children under the age of 5. Preliminarily, the vaccine appears as effective in children under the age of 2 as it does in older teens and adults. But the vaccine didn’t meet that bar in children age 2-5.
Further, now that Pfizer and BioNTech are testing three doses in those age groups. Previously, Pfizer said the earliest vaccines for children under the age of 5 wouldn’t be available until mid-2022. But Dr. Anthony Fauci, a White House advisor, recently said those shots could come next month.
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.
In people with a standard risk of severe disease, the regimen cut down on hospitalization by 70%. There were also no deaths among these Paxlovid recipients.
The results were better than Merck and Ridgeback Biotherapeutics’ rival pill, molnupiravir, which reduced hospitalizations by 30%. One molnupiravir patient died. Molnupiravir also carries the risk of cancer or passing birth defects onto unborn children in pregnant women.
Technical Analysis: PFE Stock Takes Buy Point
PFE stock topped its buy point at 51.96 out of a cup base in late November. But shares have round-tripped that entry. As of Feb. 8, Pfizer stock was below its 50-day moving average, according to MarketSmith.com. Shares are still well above their 200-day line.
(Related: Keep tabs on chart patterns by visiting IBD’s MarketSmith.com.)
Shares of Pfizer have a nearly perfect Composite Rating of 98 out of 99. The measure weighs a stock’s key growth metrics against all other stocks. Leading stocks tend to have CRs of 95 or better, according to IBD Digital.
Pfizer stock also has a Relative Strength Rating of 95 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 top 5% of all stocks in terms of performance.
The pharmaceutical company’s EPS Rating, a measure of profitability, is a 81 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 Right Now?
Based on CAN SLIM rules of investing, PFE stock isn’t a buy right now. Investors are encouraged to buy a stock when it rises above and is within 5% of its entry. It’s a bearish sign that shares have now round-tripped their entry.
The company is expected to report bullish growth in the first quarter, keeping it in line with CAN SLIM advice. But that will mostly come on the back of its Covid products.
It’s important to keep tabs on how Pfizer stock performs as it develops a Covid vaccine with BioNTech. Results appear promising so far, but it will be important to see how the company deals with the dominance of the omicron variant.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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