Pfizer (PFE), one of the prominent players in the global COVID-19 vaccine landscape, has significantly revised its financial outlook, impacting not only its stock but also sending shockwaves through its peers in the industry.
Moderna (MRNA) and BioNTech (BNTX), both well-known for their contributions to the fight against the pandemic, experienced a substantial decline in their stock prices on Monday.
This sudden turn of events comes after Pfizer announced a significant reduction in its full-year financial guidance, wiping off approximately $9 billion from its forecasts.
Pfizer’s drastic financial adjustments stem from a write-off of around $5.5 billion in inventory during the third quarter of this year, citing lower-than-expected demand for its COVID-19 products.
The revised full-year sales forecast now hovers between $58 billion and $61 billion, primarily driven by Comirnaty, the vaccine developed in collaboration with BioNTech, and the antiviral pill Paxlovid.
Notably, Pfizer has significantly scaled back its projections for Paxlovid, a medication used in the treatment of COVID-19, by $7 billion. The Comirnaty vaccine also witnessed a $2 billion reduction in sales projections.
Additionally, Pfizer cut its adjusted earnings guidance for the year to $1.45 to $1.65 per share, down from the previous estimate of $3.25 to $3.45 per share.
This abrupt shift in financial fortunes has left investors and industry insiders puzzled and concerned.
COVID-19 Vaccine Demand Amid Pfizer’s Financial Setback
Despite Pfizer’s sudden financial setback, some analysts remain optimistic about the future demand for COVID-19 vaccines and treatments.
Leerink Partners analyst Daina Graybosch anticipates a “massive uptick in demand” for the COVID-19 vaccine and the Paxlovid pill, especially as we approach the winter and holiday seasons.
The possibility of increased SARS-CoV-2 infections in the coming months further supports this expectation.
Following Pfizer’s announcement, its stock surprisingly rose by 3.6%, closing at $33.27 on the same day.
However, the same cannot be said for its industry peers. Moderna’s stock tumbled by 6.5%, closing at $91.94, while BioNTech’s stock also experienced a 6.4% drop, closing at $96.97. Novavax (NVAX) joined the downward trend with a 6% decrease, closing at $6.63.
One bright spot in Pfizer’s announcement is its new agreement with the U.S. government, which involves returning around 7.9 million Paxlovid authorized for emergency use.
In return, Pfizer will receive a credit of about $4.2 billion, which will fund a patient assistance program providing Paxlovid for free to federally insured patients through 2024 and uninsured and underinsured patients through 2028.
Additionally, Pfizer will contribute 1 million doses to a strategic national stockpile.
Evercore ISI analyst Umer Raffat suggests that while Pfizer’s move to charge private insurers for Paxlovid in 2024 might not appear favorable from an optics standpoint, it could be lucrative.
Raffat estimates that Pfizer may eventually earn $1,100 per Paxlovid course when considering the free doses provided to specific patient groups, potentially resulting in $5.5 billion in Paxlovid sales in the United States alone.
However, these positive developments for Pfizer will unlikely alleviate the pressure on Moderna and BioNTech.
Leerink Partners analyst Mani Foroohar, in response to Pfizer’s revelations, has reduced his price target for Moderna shares and maintained an “underperform” rating. Foroohar believes Moderna may face financial challenges and restructuring in the wake of these developments.
While Pfizer’s lowered sales projections have also affected BioNTech’s outlook, Graybosch, the Leerink Partners analyst, maintains her “outperform” rating on BioNTech stock, albeit with a reduced sales expectation of $4.4 billion this year.
This figure is below the company’s previous outlook of $5.3 billion in sales and the consensus forecast of $5.15 billion.
Pfizer’s financial adjustments have sent ripples through the COVID-19 vaccine industry, leaving industry observers closely watching how these developments will impact Pfizer and its competitors, including Moderna and BioNTech, in the coming months.
The shifting dynamics of the pandemic and vaccine demand remain unpredictable, adding an element of uncertainty to the future of these companies in the post-COVID era.
Source: Investor Daily Mail