Thursday Dec 14 2023 07:04
4 min
On Wednesday, pharmaceutical giant Pfizer projected 2024 revenue and profit below Wall Street's expectations, resulting in a 9% decline in the PFE share price, despite an increase in the firm’s cost-cutting target by $500 million.
A decrease in annual COVID vaccination rates and demand for treatments in 2023 has impacted the sales of Pfizer's COVID products, including Paxlovid and the vaccine Comirnaty. These products, which significantly contributed to its revenue in the past two years, are now expected to generate $8 billion in total sales in 2024.
The same concerns have plagued other drugmakers whose shares surged during the pandemic. Moderna shares dropped by 4.1%, and Pfizer's German partner in the vaccine, biotech firm BioNTech SE, saw a 3.9% decline in premarket trading.
Fizer has also faced challenges due to a significant decrease in sales of its COVID-19 vaccine and its antiviral pill Paxlovid, both of which contributed to generating over $100 billion in revenue last year.
Analysts had anticipated sales of Comirnaty alone to exceed $8 billion, in addition to more than $5 billion from Paxlovid. The decline in COVID product sales prompted Pfizer to slash its headcount and expenses, expected to save at least $4 billion annually. In November, the company cut 500 jobs at its Sandwich, Kent site in the UK.
The move appears to have done little to reassure investors, with New York-listed Pfizer shares shedding close to 9% in Wednesday trading. To make up for the shortfall in its pipeline, the U.S. drug manufacturer announced its plans to buy Seagen, an oncology drugmaker, for $43 billion earlier this year.
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Pfizer's $43 billion deal to acquire Seagen, expected to close on Thursday, is projected to add $3.1 billion to revenue next year. The company intends to establish an oncology division in early 2024, led by Chris Boshoff, the current head of cancer research and development for Pfizer.
The U.S. drugmaker anticipates its annual revenue to fall within the range of $58.5 billion to $61.5 billion, compared to analysts' average estimate of $63.17 billion, according to LSEG data.
Pfizer also forecasts an adjusted profit in the range of $2.05 to $2.25 per share — lower than analysts' expectations of $3.16.
Pfizer share price forecast: Most analysts still bullish on PFE stock
Pfizer shares had a consensus Moderate Buy rating as of December 13, according to 14 analysts surveyed by TipRanks offering 12-month price targets on PFE stock. The average price target was $39.73 (a potential 52.75% upside from the stock’s current price), with a high forecast of $75.00 and a low forecast of $25.99.
Goldman Sachs analyst Chris Shibutani remained upbeat about PFE’s prospects, reaffirming a Buy rating on the stock on December 12.
Shibutani believes that the successful conclusion of the “Seagen transaction is an important milestone for Pfizer and meaningfully improves PFE’s end-of-decade revenue outlook.” The analyst also stressed that Seagen’s offerings are backed by compelling clinical data, fueling optimism about Pfizer’s prospects after the deal closes.
At the time of writing on Wednesday, Pfizer shares were trading at $26.01, down over 9% on the day. The pharma giant’s stock has taken a hit this year and is down over 49% year-to-date. PFE’s trajectory has run in stark contrast to the U.S. stock market, with the benchmark S&P 500 index gaining over 21% this year so far.
When considering shares for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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