Pfizer: Lowered COVID-19 Product Sales Guidance Largely Offset by Cost Reduction Program

We are maintaining our $48 fair value estimate for Pfizer following the company’s reduced 2023 guidance for COVID-19 product sales and cost-cutting plans. While the updated COVID-19 outlook is lower than our projections, we had already projected COVID-19 product sales below management’s previous guidance. In tandem with the lowered COVID-19 outlook, Pfizer announced a cost-reduction plan to lower operating expenses by $3.5 billion annually, which helps to mitigate the lower COVID-19 sales projections. We believe the market was likely already expecting lower COVID-19 sales guidance, as we had, but the magnitude of the cost reduction program is a positive surprise. Pfizer’s ability to cut costs and adapt to demand while supporting strong margins helps to reinforce the company’s wide moat.