Pfizer Posts Strong Q2, Led by COVID-19 Vaccine Sales
We expect to slightly raise Pfizer’s fair value estimate based on the strong growth, but we view the stock as largely fairly valued.
Pfizer (PFE) reported strong second-quarter results ahead of our expectations, buoyed by exceptionally strong COVID-19 vaccine sales as well as solid growth from the core portfolio. We expect to slightly raise Pfizer’s fair value estimate based on the strong growth, but we view the stock as largely fairly valued, with the market appropriately valuing Pfizer’s current products and pipeline drugs, both of which look well positioned to support Pfizer’s wide moat.
In the quarter, total sales increased 86% operationally (up 10% excluding the COVID-19 vaccine sales). However, we expect total sales growth will slow over the next 12 months as COVID-19 vaccine demand shifts toward emerging markets where pricing is lower. Longer term, we expect a tail of COVID-19 vaccine sales of close to $2 billion annually based on booster shots for the elderly and immuno-compromised. Potential upside exists if larger demand for boosters emerges or new vaccines are developed for variants. Pfizer is exploring a new vaccine for the delta variant despite the strong protection already offered by its current vaccine.
The remaining portfolio is performing well, led by cardiovascular drug Eliquis and rare disease drug Vyndamax. We expect Eliquis to continue to take share from the less effective warfarin, and Vyndamax is still early in its launch trajectory. Also, the recent approval of Prevnar 20 should enable continuation of this important franchise, as the new vaccine provides almost one third more coverage than Merck’s competitive vaccine.
Pfizer continues to make strides with pipeline drugs. While the JAK inhibitor class is facing increased scrutiny by the FDA, we still expect approval for immunology drug abrocitinib by the end of the year based on a strong safety profile. Over the next 12 months, we expect positive pivotal data for new blockbusters in gene therapies (Duchenne muscular dystrophy and hemophilia A and B) and for a respiratory syncytial virus vaccine based on strong early-stage data.
|Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.|
Damien Conover does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.