Pharma and biotech stocks have benefited from the hype surrounding the Covid-19 vaccine, unlike Pfizer (NYSE:PFE) stock, which shed 8% this year. However, with the continued success in its clinical trials and the relaxation in Covid-19 restrictions, expect Pfizer stock to take off in the latter half of the year.
The company has already begun Phase 2/3 of its trials on its vaccine candidate and its partner BioNTech (NASDAQ:BNTX). It is currently a front-runner in the Covid-19 race and might seek express approval by this fall provided everything goes smoothly.
Hence, average price targets for Pfizer stock have shot up with estimates as high 44% of its current value.
Streamlined Business Going Forward
Earnings in 2020 have fallen off the wayside due to the coronavirus-led market slowdown. However, analysts are beefing up estimates for 2021, expecting a 13.9% growth in earnings per share to $3.34. Additionally, revenues are expected to climb to rebound by almost 10% next year to $54.3 billion.
Second-quarter results for Pfizer were admittedly poor but showed signs of promise in a few areas. Its generics business, Upjohn, was one of the main reasons why revenues dipped 11% year-over-year. However, Pfizer is now looking to spin off the division to Mylan (NASDAQ:MYL), a Dutch pharmaceutical company, by the fourth quarter. This step will allow Pfizer to focus more on its profitable biopharma segment.
Its biopharma business grew 4% year-over-year in the second quarter to $9.8 billion. On the flip side, Upjohn’s revenues tanked 31% to $2 billion.
The management feels that with relaxed Covid-19 restrictions, the company could recover in the second half of the year. With more patients potentially visiting doctors and more elective procedures, expect a healthy increase in revenues. Management now forecasts revenues between $48.6 billion and $50.6 billion, slightly better than its estimates in the previous quarter.
Furthermore, Pfizer’s revenues also took a hit due to the 6% reduction in GSK Consumer Healthcare’s revenues. This entity is a joint venture between GlaxoSmithKline (NYSE:GSK) and Pfizer who hold a 68% and 32% stake, respectively. The negative impact on the top OTC markets, including the U.S. and China, led to weakened revenues for the company.
Solid Covid-19 Program
The novel coronavirus engulfed the significant parts of the world in March, and since then, several companies have taken up the challenge of developing a vaccine. However, a select few have shown sustained potential so far, which includes Pfizer. The vaccine could be a game-changer for the company making it a millionaire-maker stock.
As mentioned before, Pfizer is working with German biotech company BioNTech, in developing its Covid-19 vaccine. The partners initiated Phase 1/2 of its clinical trials in April for four vaccine candidates. Two of them emerged as the most promising of the lot, which were fast-tracked by the Food and Drug Administration (FDA).
The partners could have 100 million doses of the vaccine ready by the conclusion of the year. They have already signed an agreement with the U.S. government to supply 100 million doses for $1.95 billion. A successful vaccine could generate massive revenues for Pfizer in the near term. However, if annual vaccinations are needed for the disease, it could be a source of recurring income for the company.
Final Word on Pfizer Stock
Pfizer is the cream of the crop as far as the Covid-19 vaccine candidates are concerned. Its vaccine trials are in the advanced stages, and the October deadline seems promising at this point. It has the firm backing of the government to take it past the finish line.
Hence, it’s best to grab Pfizer stock which is currently trading at a considerable bargain.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
