Pfizer stock is forming a promising base after the company gained authorization in the U.S. and Europe to vaccinate children as young as 12 against Covid.
But Pfizer (PFE) shares have also faced pressure since President Joe Biden and U.S. Trade Representative Ambassador Katherine Tai voiced support for waiving the patent rights protecting Covid vaccines. New concerns have also emerged that the Covid vaccines using messenger RNA technology could be tied to heart inflammation in people younger than age 30.
Pfizer stock broke out May 3 after earnings topped first-quarter forecasts. Now, it’s staring down the barrel of a new buy point out of a second cup-with-handle base. The company has also raised its full-year outlook, partially on bullish sales of its BioNTech (BNTX)-partnered Covid shot.
The companies are actively submitting information to the Food and Drug Administration in the hopes of securing a full approval for their Covid vaccine. This would allow it to stay on the market after the pandemic ends. The companies could also market directly to consumers and change the vaccine’s price.
Later this year, Pfizer expects to have the results of studies in children ages 6 months to 11 years old. The possible need for booster shots could further extend vaccine sales. As of mid-April, Pfizer said it had inked deals for 1.6 billion doses this year. In its first-quarter earnings news release, BioNTech said it had secured contracts for 1.8 billion doses in 2021.
So, all in all, is Pfizer stock a buy?
Pfizer Stock Fundamentals: Earnings Strong
In the first quarter, adjusted Pfizer earnings were 93 cents per share, growing 47% vs. the year-ago period. Sales soared 45% to $14.58 billion. Both measures easily beat forecasts.
The company’s Covid vaccine brought in $3.46 billion in sales.
Less bullish for Pfizer stock, sales of pneumonia vaccine Prevnar 13 declined 11% to $1.28 billion. Sales of cancer drug Ibrance were flat at $1.25 billion. And both missed estimates, Mizuho Securities analyst Vamil Divan said in a note to clients.
But sales of rare-disease drugs Vyndaqel/Vyndamax nearly doubled to $453 million. And anticoagulant Eliquis, partnered with Bristol Myers Squibb (BMY), generated $1.64 billion in sales. That was an increase of 26% year over year.
Overall, total first-quarter growth was also in line with CAN SLIM rules for investing. Investors are encouraged to seek stocks with 20%-25% recent sales and earnings growth. Big institutional investors — who account for up to 70% of all market trades — usually look for stocks with accelerating earnings and sales growth.
That trend is expected to continue in the second quarter. Analysts polled by FactSet call for adjusted income of 97 cents per share and $18.44 billion in sales, up a respective 24% and 56% year over year.
Pharmaceutical Company’s Annual Metrics
Pfizer’s sales popped 2% last year to $41.91 billion. That excluded the Upjohn unit, which Pfizer merged with Mylan to create Viatris (VTRS). The Upjohn business housed Pfizer’s older drugs, including those facing generic competition.
That growth still lagged Pfizer’s last year of strong gains in 2010. Then, sales jumped 34%.
Top sellers in 2020 included Ibrance, which generated $5.39 billion in sales, up 9%. Sales of blood thinner Eliquis popped 17% to $4.95 billion. But revenue from Prevnar 13 was flat at $5.85 billion.
Xeljanz, which is facing scrutiny for a recent post-marketing study, generated $2.44 billion, rising 9%. Vyndaqel and Vyndamax, which treat a condition that can cause heart failure, brought in $1.29 billion.
For 2021, analysts surveyed by FactSet call for Pfizer to earn $3.74 a share, minus some items, up close to 68%. Sales are expected to pop about 74% to $72.87 billion. Pfizer predicts adjusted earnings of $3.55-$3.65 per share and $70.5 billion to $72.5 billion in sales.
PFE Stock News: Xeljanz Study Hits Hard
Pfizer stock tumbled close to 3% on a single January day after the company said rheumatoid arthritis drug Xeljanz failed to outperform a rival medicine in a post-marketing study. The test was performed in patients age 50 and older at risk of a cardiovascular event, like a heart attack.
Xeljanz only had to prove it wasn’t inferior to the rival drug, known as a TNF inhibitor. That didn’t happen. Now, Pfizer said it’s working with the Food and Drug Administration to analyze the results.
The news slugged AbbVie (ABBV) too. In late June, the FDA delayed its review of AbbVie drug, Rinvoq, in patients with two forms of arthritis, citing its ongoing review of Pfizer’s Xeljanz.
More bullishly, in June, Pfizer said its drug, tofacitinib, lowered the risk of death or respiratory failure in patients hospitalized with Covid.
Pfizer Stock And Coronavirus Vaccine News
Pfizer stock fell 1.4% on June 23 after the U.S. Centers for Disease Control and Prevention said there’s a likely link between Covid shots from Pfizer and Moderna (MRNA) and heart inflammation. The rare illness has occurred primarily in young men.
Pfizer has said it had inked contracts for roughly 1.6 billion doses of its coronavirus vaccine in 2021. On May 10, BioNTech said it expects to hit a manufacturing capacity of 3 billion this year, and to top 3 billion in 2022.
At six months, the companies’ vaccine is 91.3% effective against Covid-19, Pfizer said in early April. The vaccine was also 100% effective in South Africa, where a new strain is prevalent.
Further, the FDA has said Pfizer and BioNTech can transport and store their Covid vaccine at more standard freezer temperatures. On May 10, the FDA authorized the companies’ Covid vaccine for emergency use in teens ages 12-15. European officials followed on May 28.
In September, Pfizer expects to have the test results of its Covid vaccine in children ages 2-5 and 5-11. It will then ask for emergency authorization for those groups. In November, the company expects to have data from tests in children age 6 months to 2 years.
The companies are also actively submitting data to the FDA in the hopes of securing a full approval.
Like Moderna, Pfizer and BioNTech are also testing out a booster to the original vaccine. The two vaccines both use messenger RNA technology, or mRNA, which tells the body to make a single spike protein, mimicking the outside of the virus.
Both vaccines have come under scrutiny recently, however, as the U.S. Centers for Disease Control and Prevention look into cases of heart muscle and tissue swelling following second doses. The condition has occurred in young people, particularly men.
Technical Analysis: PFE Stock Forms New Base
Pfizer stock broke out of a cup-with-handle base with a buy point at 39.77 on May 3. Shares later fell, but returned to their buy zone throughout the first half of May.
Now, Pfizer stock is forming a new cup-with-handle and an entry at 41.19.
Shares slipped below their 50-day line on June 23 but remained above their 200-day moving average. That trend continued on June 29.
(Related: Keep tabs on chart patterns by visiting IBD’s MarketSmith.com.)
Shares of Pfizer have a poor IBD Composite Rating of 65. The 1-99 measure pits a stock’s key growth measures against all other stocks. Leading stocks tend to have CRs of 95 or better, according to IBD Digital.
Pfizer stock also has a weak IBD Relative Strength Rating of 38 out of a best-possible 99. The RS Rating measures a stock’s 12-month running performance against all other stocks. That RS Rating means Pfizer stock tops 38% of all stocks in terms of performance.
The pharmaceutical company’s EPS Rating, a measure of profitability, is a 69 out of a best-possible 99. The EPS Rating compares a stock’s recent and longer-term earnings growth against all other stocks.
So, Is Pfizer Stock A Buy Right Now?
Based on CAN SLIM rules of investing, Pfizer stock isn’t a buy right now. Shares haven’t yet topped their new buy point. It’s best to buy a stock once it hits that entry and is within the 5% chase zone.
The company is expected to report bullish growth in the second quarter, putting it in line with CAN SLIM advice.
It is important to keep tabs on how Pfizer stock performs as it develops a coronavirus vaccine with BioNTech. Results appear promising so far, but it will be important to see how the company ramps its manufacturing now that it has authorization in the U.S. and other countries.
To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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