Pfizer (PFE) faced a significant stock downturn, hitting a 10-year low, as it adjusted its 2024 sales forecast to potentially $5 billion below Wall Street expectations. This revision reflects a more conservative and reliable approach to its COVID-19 business, with projected revenues from its COVID-19 vaccine and treatment expected to fall to $8 billion in 2024, down from $57 billion in 2022 and lower than both analyst forecasts and Pfizer's previous estimate for the current year. CEO Albert Bourla emphasized the company's desire for reliability and to avoid the uncertainty that marked their financial projections in the current year.
Pfizer's strategy, post-COVID windfall, involved significant acquisitions, including the impending $43 billion deal for cancer drugmaker Seagen. However, its recent launch of a new RSV vaccine has been underwhelming, lagging behind a competitor's product and contributing to a 44% decline in its shares this year. Additionally, the U.S. has seen a sharp decline in COVID vaccinations, with only 17% of the eligible population receiving the most recent boosters, a factor attributed to reduced virus concern and vaccine fatigue.
Market Overview:
-Pfizer shares plunge to a 10-year low on weaker-than-expected 2024 revenue forecasts.
-COVID-19 sales expected to plummet further, reaching $8 billion compared to analysts' $13 billion estimate.
-Adjusted profit outlook also falls short of expectations, raising concerns about the sustainability of post-pandemic growth.
Key Points:
-Pfizer's COVID-19 vaccine and treatment revenue peaked at $57 billion in 2022 but is projected to drop significantly in 2024.
-The company aims to be "conservative" and avoid repeating the "uncertainty" of 2023's COVID sales misses.
-Recent acquisitions like Seagen and a disappointing RSV vaccine launch haven't offset the decline in COVID revenue.
-Shares of Pfizer's German partner BioNTech (22UAy.DE) also fall, while rival Moderna (MRNA) sees a slight gain.
Looking Ahead:
-Pfizer faces pressure to diversify its portfolio and boost pipeline development to compensate for waning COVID-19 sales.
-The company's upcoming reorganization and cost-cutting efforts will be scrutinized for effectiveness.
-Investors will look for signs of promising new drugs and successful integrations of acquired companies.
The company also projected its 2024 adjusted profit to range between $2.05 and $2.25 per share, significantly lower than the analyst expectation of $3.16. Consequently, Pfizer's shares closed down 6.7% on Wednesday, resulting in a nearly $11 billion loss in market capitalization. This decline also impacted U.S. shares of BioNTech (22UAy.DE), Pfizer's German vaccine partner, which fell by 5.5%. In contrast, shares of Moderna, a COVID vaccine rival, marginally increased by 0.7%.
Despite the anticipated revenue from Seagen, which is expected to add $3.1 billion next year, Pfizer faces challenges from impending generic competition for several of its drugs. Critics like Jeff Jonas, a portfolio manager at Gabelli Funds, question whether Pfizer's current strategies are bold enough to rejuvenate its research and development and offset the revenue loss. The company's reorganization efforts, including increasing its cost-cut target by $500 million and restructuring its commercial business, aim to stabilize its financial position. However, the looming patent expirations of several Pfizer products add to the challenges in revitalizing the company's market performance.
