Pfizer falls as slowing demand for COVID-19 drugs weighs on outlook

January 31, 2023 7:30 AM EST
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(Updated - January 31, 2023 8:56 AM EST)

By Geoffrey Smith and Senad Karaahmetovic -- Pfizer (NYSE: PFE) stock fell nearly 3% in premarket on Tuesday after it predicted profit and revenue will fall this year, a reflection of slowing demand for its COVID-19 vaccine and antiviral products.

The pharma giant said it expects adjusted earnings per share to fall to a range of $3.25-$3.45, well below consensus expectations of around $4.44.

For revenue, it expects a range around a midpoint of $69 billion, which also represents a clear shortfall versus forecasts of $74.3B.

In the fourth quarter, Pfizer's adjusted EPS was $1.14, some 5% ahead of the market consensus, while revenue growth slowed to only 2% on the year, at $24.29B.

The shortfalls appeared to be caused at least in part by diverging assumptions about the outlook for COVID-19-related sales in China this year.

Analysts have assumed that demand for the group’s antiviral drug Paxlovid in particular will remain strong, now that China’s relaxation of its quarantine and mobility rules is allowing faster transmission of the disease.

However, Paxlovid is set to be dropped from a list of drugs for which the government will reimburse purchase costs as of March. Chief executive Albert Bourla is on record as saying that he expects to be able to offer the drug outside of state healthcare schemes from April 1, but the group hasn’t budgeted for any Paxlovid sales in China after March.

Pfizer's COVID-19 vaccine Comirnaty was the first to be approved by most world health regulators during the pandemic, and sales for Comirnaty and the later arrival of Paxlovid have come to dominate the group's business, far outstripping demand for its other drugs.

However, with the pandemic having eased and natural immunity to COVID-19 having risen in most of the world, the company is now forecasting a sharp drop in its sales. Revenue from Comirnaty is set to fall by nearly two-thirds to around $13.5B, while revenue from Paxlovid is expected to fall 58% to around $8B.

The windfall from those two drugs allowed Pfizer to pay out $11B in dividends and stock buybacks last year. The company noted that its current financial guidance "does not anticipate any share repurchases in 2023."

BMO analyst Evan David Seigerman said Pfizer's EPS guidance is disappointing, although overall results were "better than it could have been, given the uncertainty around how the company would forecast Covid-19 revenues."

Cantor Fitzgerald analyst Louise Chen weighed in more positively on the results as "the miss on the 2023 guide was widely anticipated, which is why PFE's stock has been weak ahead of earnings." The analyst remains positive on PFE stock going forward and reiterated an Overweight rating and a $75 per share price target.

"We continue to believe that the sales potential of PFE's products and pipeline remain underappreciated in 2025+. Therefore, upwards earnings estimate revisions and multiple expansion, in 2025+, should move PFE's shares higher, in our view."

By 08:55 ET (13:55 GMT), Pfizer stock was down 2.7%

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