Pfizer Earnings: COVID-19 Sales Fall, but Steady Gains In Base Business

Pfizer Stock at a Glance

• Fair Value Estimate: $48.00
• Morningstar Rating: 4 stars
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide

Pfizer Earnings Update

Pfizer PFE reported mixed second-quarter results that fell below our projections, but we don’t expect a major change to the firm’s fair value estimate. The lower-than-expected sales from the COVID-19 vaccine Comirnaty and treatment Paxlovid could still potentially rebound later in the year during the typically more robust fall respiratory season. Pfizer has contingency plans ready to significantly cut costs if COVID-19-related sales don’t improve in the third quarter. We project COVID-19 sales above consensus expectations but have a forecast below management’s implied long-term run rate. We think the new formulation of Comirnaty will support a more immediate rebasing of pricing close to $70 post-pandemic (including rebates) from an earlier price that was close to $20. The price increase should help buoy Comirnaty, but we still expect the vaccine’s sales to fall by over 60% in 2023.

Excluding COVID-19 products, total sales grew 5% in the quarter—a rate that should continue over the next two years before patent pressures begin to accelerate in 2025. Rare-disease drug Vyndaqel grew by 43%, with more growth likely through expanding market share. Emerging competition could potentially displace Vyndaqel, but we believe the drug’s high efficacy bar and entrenched position will create significant hurdles for new competition. The firm’s largest drug, Eliquis (for cardiovascular disease), posted a gain of 2%, and we expect a slight increase in growth, as the market potential is still significant outside the United States.

On the pipeline front, Pfizer is making progress, helping to fortify its wide moat. The breast cancer drug CDK4i could potentially be a multi-billion-dollar opportunity. The drug is about to start phase 3 development and could replace Pfizer’s Ibrance, which generated over $5 billion in sales in 2022. Also, we believe the diabetes and weight-loss drug danuglipron represents a major opportunity, but that it is risky in the strong competitive environment.