Pfizer (PFE) shares rose in mid-May on enthusiasm for its potential rival Novo Nordisk (NVO) and Eli Lilly (LLY) in the treatment of diabetes and weight loss.
Pfizer tested its treatment in patients with type 2 diabetes for 16 weeks. A high dose of the twice-daily pill resulted in a weight loss of about 10 pounds. In comparison, patients who received a high dose of Novo's weekly injection, Ozempic, lost as much in 30 weeks, according to the drug's phase 3 study.
However, one analyst noted that Pfizer has not yet decided whether to send the twice-daily pill to the final phase of testing. The company is awaiting the results of an interim study on a once-a-day pill.
Investors and patients are turning to a range of approved and investigational weight loss drugs. They mimic a gut hormone that signals the brain when the stomach is full. They also help increase insulin production in the pancreas, thereby improving blood sugar control.
The segment could be important for Pfizer, which is struggling with an expected decline in its Covid vaccine and oral treatment. Sales at both companies beat expectations in the first quarter, but the company's full-year guidance suggests both will collapse in 2023.
Pfizer also received approval for its RSV vaccine for older adults. Respiratory syncytial virus causes cold-like symptoms in most people, but it can be fatal in newborns and older adults. GSK (GSK) has already received approval for his shot Moderna (MRNA) hopes to follow suit.
An advisory panel to the Food and Drug Administration voted unanimously to approve Pfizer's RSV vaccine for use in pregnant women. The aim is to protect newborns. But only 10 voted for the vaccine's safety.
In addition, Pfizer takes over the company Seagen (SGEN) for $43 billion. Seagen is working on cancer treatments known as antibody-drug conjugates. These drugs deliver toxic chemicals directly to tumors to limit damage to healthy tissue.
In addition, the company said its hemophilia treatment reduced annual bleeding episodes by 92%. But shares fell on the news.
So all in all, PFE stock is a buy right now?
Pfizer stock fundamentals: Beat gains but fall
In the first quarter, Pfizer earned $1.23 per share on an adjusted basis on sales of $18.28 billion. Profits plummeted 24% while sales plummeted 29%. However, analysts called for much sharper declines.
But one analyst says the drop was due to better-than-expected sales of Covid products BioNTech (BNTX) partner vaccine and oral treatment Paxlovid.
Comirnaty brought in $3.06 billion in sales, while antiviral drug Paxlovid brought in $4.07 billion. Both exceeded Wall Street expectations. But Comirnaty's sales fell 77% as demand for Covid vaccines eased. Paxlovid sales increased by 177%.
However, Pfizer's full-year guidance suggests that sales of both products will decline in 2023.
Meanwhile, sales of newly acquired products Nurtec and Oxbryta – treatments for migraine and sickle cell anemia – fell short of expectations.
Sales of Xeljanz, one of Pfizer's best-known drugs, reportedly fell 36% to $237 million. Xeljanz treats immunological disorders but is under pressure after the FDA required companies with products in this class to add a new warning label to the prescription.
Sale of Bristol Myers Squibb (BMY) partner blood thinner Eliquis rose 5% to $1.87 billion. But Eliquis will lose exclusivity on the market in the coming years.
For the current quarter, analysts are expecting adjusted Pfizer earnings of 62 cents per share on sales of $13.73 billion. Profits would plummet by 70% and sales would fall by 51%.
Investors are advised to look for stocks that show recent revenue and earnings growth of 20-25%. Pfizer does not achieve these goals. Large institutional investors — who account for up to 70% of all market transactions — typically look for stocks with accelerating earnings and top-line growth.
Annual key figures of a pharmaceutical company
Pfizer's revenue hit a record $100.33 billion in 2022. Top sellers included Comirnaty and Paxlovid, which brought in revenue of $37.81 billion and $18.93 billion, respectively.
Blood thinner Eliquis brought in $6.48 billion, up 9% on a strict basis, as reported. Sales of its pneumonia vaccine Prevnar rose 20% to $6.34 billion.
However, there were declines in other important products. Sales of Xeljanz, which treats inflammatory diseases, fell 27% to nearly $1.8 billion. Sales of cancer drug Ibrance also fell 6% to $5.12 billion.
For 2023, Pfizer expects adjusted earnings per share to be in the range of $3.25 to $3.45 and revenue to be in the range of $67 billion to $71 billion. In the middle, profits would plummet 49% and sales fall 31%. Pfizer expects $13.5 billion from Comirnaty and $8 billion from Paxlovid, down 64% and 58%, respectively.
Pfizer stock and covid news
The company adapted its original Covid vaccine to include an element targeting newer subvariants of Omicron called BA.4 and BA.5.
The updated booster is still trying to block the ancestral strain of Covid. This vaccine is now available as a booster dose for children aged 6 months and over and as a second dose for people aged 65 and over and for people with immunocompromised conditions.
But there are a few problems here. First, the approvals were based on laboratory studies and human testing data from an earlier version 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 prevalent in the US, accounting for about 54% of cases. BA.4 and BA.5 account for virtually no cases in the US
Pfizer and BioNTech say the updated booster shot raised antibodies against newer Omicron iterations, but a study at the University of Texas Medical Department failed to find a robust response against the BQ.1.1 strain, according to CNBC. This strain accounts for a fraction of cases and is in decline.
In the antiviral space, Pfizer tested Paxlovid on unvaccinated Covid patients who were at risk of developing serious illness. Hospital admissions were reduced by 89% when patients started treatment within three days of symptom onset. No Paxlovid recipients died.
Pfizer is also working on another oral antiviral with Clear Creek Bio.
More PFE stock news
Pfizer was testing an injection under the skin to treat hemophilia A and B. The drug resulted in a 92% reduction in annual bleeding rates, compared with a 35% reduction in patients receiving standard treatments. However, one analyst says the mechanism used by Pfizer could lead to clotting problems in a larger study.
US regulators recently approved Pfizer's pneumococcal vaccine for infants and children. It attempts 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 cancer drug called leuprolide reduced the risk of cancer spreading or death in men with prostate cancer by 58% compared to a placebo and leuprolide. But the news didn't help Pfizer stock, which has fallen sharply since December.
The FDA also accepted Pfizer's application to approve a combination of the drugs Baftovi and Mektovi in patients with a form of lung cancer characterized by a genetic mutation. The FDA will make a decision on approving the regimen in the fourth quarter.
In March, the FDA approved a Pfizer migraine nasal spray called Zavzpret, and an FDA panel of independent experts voted in favor of Pfizer's RSV vaccine for older adults. However, the jury was divided: seven were for the effectiveness and safety of the shot. Four voted against the vaccine.
Technical Analysis: PFE shares hit 50-day moving average
According to MarketSmith.com, Pfizer stock is trading below its 50-day and 200-day moving averages.
The stocks don't form a chart pattern for investors to keep track of.
(Related: Keep an Eye on Chart Patterns by Visiting IBD's MarketSmith.com.)
Pfizer stocks have a composite rating of 69 out of a best possible 99. The metric weights a stock's key growth metrics relative to all other stocks. According to IBD Digital, leading stocks tend to have a composite rating of 95 or better.
Pfizer stock has a relative strength rating of 26 out of a best possible 99. The RS rating measures a stock's 12-month rolling performance relative to all other stocks. This RS rating means that Pfizer stock is just above the bottom quartile of all stocks in terms of performance over the past year.
The pharmaceutical company's EPS rating, a measure of profitability, is 88 out of a best possible 99. The EPS rating compares a stock's recent and longer-term earnings growth to all other stocks.
So, is PFE stock a buy?
Based on smart investment rules, PFE stock is currently not a buy. In at least some ways, it was a sell when Pfizer stock fell below its 50-day moving average in January. Stocks that fall below this key line often come under downward pressure at this ceiling.
It will be important to keep a close eye on Pfizer's stock performance as Covid moves into its endemic phase and the company expands its pipeline. Investors are watching the adult RSV vaccine closely, which could launch at the same time as competitors from GSK and Moderna. The diabetes pill is further behind, but it could also be a major contributor for Pfizer.
For the best stocks to buy and watch, visit the IBD stock listings. Make sure you also keep track of the stocks you want to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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