Pfizer Earnings: COVID-19 Sales Buoy Results, but Long-Term Outlook Unchanged (2024)

Maintaining fair value estimate of $48 for Pfizer stock; shares undervalued.

May 2, 2023

Pfizer Stock at a Glance

Fair Value Estimate: $48
Star Rating: 4 stars
Morningstar Uncertainty Rating: Medium
Morningstar Economic Moat Rating: Wide

Pfizer Earnings Update

Pfizer PFE reported first-quarter results ahead of our projections, largely driven by higher-than-expected COVID-19 product sales. While sales of COVID vaccine Comirnaty fell to $3.1 billion, this was above our $2.2 billion estimate, and COVID treatment Paxlovid generated $4.1 billion, well ahead of our $1.6 billion estimate. We had expected a greater work-down in the high levels of inventory for both products.

We are not making any major changes to our fair value estimate, as our projected 2023 COVID product sales are still tracking to a 50%-plus decline as the pandemic eases, followed by expected stable demand for several years. However, management appears to be guiding to much higher Comirnaty and Paxlovid sales in 2024 and beyond. While we view the stock as already undervalued, if management achieves its longer-term COVID sales projection, further upside to our valuation is likely.

Excluding COVID product sales, total sales increased 5% operationally, a trend we expect will continue through 2025. Steady gains for cardiovascular Eliquis (up 7%) and rare-disease drug Vyndaqel (up 16%) should continue based on leading efficacy, but patent losses beginning in 2026 and emerging competition for Vyndaqel are likely to cause declines longer-term. Also, we expect further declines for cancer drug Ibrance (down 5%) based on growing traction from competitive drugs that have shown a stronger survival benefit.

Despite the pressures on Pfizer’s long-term growth, we are encouraged by continued development in the pipeline, which reinforces the firm’s wide moat. We remain most bullish on several near-term launches, including the respiratory syncytial virus vaccine and immunology drugs ritlecitinib and etrasimod. In the intermediate pipeline, midstage data for GLP-1 drugs danuglipron and lotiglipron expected later this year could set the stage for phase 3 studies targeting major competitor blockbusters with an oral convenience benefit.

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The author or authors do not own shares in any securities mentioned in this article.Find out about Morningstar’s editorial policies.

As an enthusiast and expert in finance and investment analysis, I've honed my expertise through years of hands-on experience in analyzing stocks, market trends, and financial instruments. I have a robust understanding of various valuation methodologies, including discounted cash flow (DCF) analysis, relative valuation, and assessing economic moats, among others.

In the provided article discussing Pfizer's stock analysis by Damien Conover, CFA, several essential concepts related to stock valuation and financial analysis are highlighted. Here's a breakdown of the key concepts mentioned in the article:

Fair Value Estimate: This is an evaluation of a stock's intrinsic worth based on various factors such as the company's financial performance, growth prospects, industry conditions, and future cash flows. In this case, the fair value estimate for Pfizer's stock is $48.
Star Rating: A rating system used to indicate the attractiveness of a stock based on its valuation. The 4-star rating suggests that Pfizer's shares are undervalued in relation to the estimated fair value.
Morningstar Uncertainty Rating: Indicates the level of uncertainty surrounding the fair value estimate. A medium uncertainty rating implies a moderate level of uncertainty in the estimation.
Morningstar Economic Moat Rating: This assesses a company's competitive advantages and barriers to entry in its industry. Pfizer has a wide economic moat, indicating a strong competitive position.
Earnings Update: Pfizer's first-quarter results surpassed projections due to higher sales of COVID-19 products. While sales for Comirnaty (COVID vaccine) and Paxlovid (COVID treatment) exceeded expectations, there was a smaller decrease in inventory than anticipated.
Future Projections: Expectations for declining COVID product sales in 2023 due to the easing pandemic, followed by stable demand. Management indicates potential higher sales in 2024 and beyond for Comirnaty and Paxlovid, which could positively impact the stock valuation.
Product Sales Beyond COVID: Apart from COVID-related products, Pfizer's other products like Eliquis, Vyndaqel, and Ibrance showed varied performance. Sales trends for these products are forecasted, considering factors like patent losses and emerging competition.
Pipeline Development: Highlighted optimism about Pfizer's pipeline development, reinforcing its wide economic moat. Near-term launches and mid-stage data for various drugs are anticipated, potentially impacting future revenues and the company's competitive position.

Understanding these concepts is crucial for investors looking to evaluate Pfizer's stock and make informed decisions based on the company's financial performance, growth prospects, and the competitive landscape within the pharmaceutical industry.