As Americans roll up their sleeves this week for the Covid-19 vaccine developed by
RBC Capital analyst Randall Stanicky says Pfizer’s accomplishment “is nothing short of remarkable.” In a Wednesday note, the analyst remarks that Pfizer got the vaccine to market in record time, while refusing federal money given to rival developers, including Moderna.
But with Pfizer’s stock (ticker: PFE) reaching a Tuesday close of $38.71, up from its March 2020 bottom around $26, Stanicky says Pfizer’s vaccine opportunity has been fully discounted in its stock price. His note downgrades the stock from Outperform to Sector Perform—comparable to a Hold. He nudged down his price target, too, from $43 to $42.
“We see it as likely rangebound near-term,” the RBC analyst writes.
Wednesday afternoon, Pfizer shares had eased 1.7% to $38.06 as the
rose 0.2%. BioNTech stock slid 5.5% to $105.09.
Investors have been selling vaccine stocks on the week’s good news, which included a report from the U.S. Food and Drug Administration indicating the agency’s likelihood of approving a vaccine from Moderna (MRNA). Moderna stock has tumbled all week, from $160 to $137 on Wednesday.
Pfizer’s recent stock price largely anticipates that the company will sell most of the 1.3 billion doses of Covid vaccine it says it can produce in 2021. Stanicky’s financial model predicts that Pfizer and BioNTech will sell just over a billion doses next year, at $19.50 a dose, with about 45% of those sales in the U.S. The resulting $20 billion in vaccine revenue would account for 45% of Pfizer’s global sales for 2021, he reckons, and 90 cents of the roughly $3.50 a share in adjusted earnings that he predicts.
But there will be other Covid vaccines, including a competitive offering from Moderna that will likely get U.S. authorization this week. As the pandemic ends, the market for Covid vaccines will also dwindle, shrinking sales of the Pfizer/BioNTech shots to a couple of billion dollars a year, he concludes.
The analyst hasn’t changed his constructive view of the rest of Pfizer’s business, which he thinks will increase its earnings by 10% a year, now that the company has spun off its slower-growing products to an entity called
(VTRS). But the company will suffer some patent expirations after 2026, and the RBC analyst isn’t convinced that its development pipeline of things such as gene therapies will be mature enough to offset the lost sales.
“Pfizer deserves credit for bringing its first-to-market vaccine over the finish line,” Stanicky writes. But the best-case scenario for Covid sales has been priced into the stock, he concludes.
Write to Bill Alpert at firstname.lastname@example.org