Pfizer Reports Solid Q3, Buoyed by Coronavirus Product Sales as Pipeline Investments Increase

Pfizer reported solid third-quarter results ahead of our expectations, but we don’t expect any major changes to our fair value estimate, as part of the strength stemmed from better-than-expected COVID-19 vaccine (Comirnaty) sales that will likely fade quickly in 2023. Nevertheless, the massive bolus of COVID-19-related sales (Comirnaty and COVID-19 treatment Paxlovid) generated almost $12 billion in the quarter, enabling Pfizer to redeploy capital toward the pipeline and acquisitions targeting innovative drugs (Biohaven and Global Blood Therapeutics), which should help support the firm’s wide moat. While we expect a major decline in COVID-19 sales due to the pandemic receding (even with the U.S. price increase on Comirnaty as the vaccine shifts to private payer markets from government pay), the recent increase in pipeline investments should help mitigate Pfizer’s expected patent headwinds that increase in 2028.