Pfizer stock is setting up for a wild ride in 2025.
Not only is the pharma behemoth facing off with activist investor Starboard Values, President-elect Donald Trump plans to appoint well-known vaccine skeptic Robert F. Kennedy Jr. to head up the Department of Health and Human Services. Vaccines accounted for more than a fifth of Pfizer's sales in the September quarter.
Meanwhile, the Covid pandemic continues to provide an unpredictable and dwindling revenue stream. And the company's recent acquisitions have yet to pan out meaningfully. Recently Pfizer pulled its sickle cell disease treatment, Oxbryta, from the market after a series of patient deaths. The company acquired Oxbryta in its $5.4 billion takeover of Global Blood Therapeutics.
But the company says it's on track to deliver at least $4 billion in cost savings by the end of the year. Pfizer is also trying to break into the high-profile obesity treatment space, though it has faced numerous setbacks in that arena. The company also just issued its outlook for 2025.
While the revenue guidance came up short, the earnings outlook beat some estimates, leading one analyst to call Pfizer's view "marginally encouraging."
So, whether Starboard can do anything to impact dwindling Pfizer stock — and whether Kennedy's appointment truly shakes up broader biopharma stocks — remains to be seen.
It could simply be Pfizer is "too big to scare," Carol Levenson, a Gimme Credit analyst, said in a report.
Pfizer Stock: Too Big To Scare?
Pfizer stock took a header from October to November. Shares have dropped markedly since Oct. 9, falling about 12.5% through the close on Dec. 17. The stock spiked nearly 5% on Dec. 17 after Pfizer issued its 2025 outlook. Still, Pfizer stock remains well below its 50-day and 200-day moving averages, according to MarketSurge chart analysis.
Part of the fallout stemmed from Trump's plan to appoint Kennedy to the Secretary of HHS post. Pfizer stock tumbled 4.7% on Nov. 15 after Trump posted his nomination plan on X, the social media platform formerly known as Twitter.
Trump called the "industrial food complex and drug companies" for engaging in "deception, misinformation and disinformation." Kennedy, he said, will work to ensure all Americans are "protected from harmful chemicals, pollutants, pesticides, pharmaceutical products and food additives that have contributed to the overwhelming Health Crisis in this Country."
Shares of Moderna and BioNTech also took a beating on the news. BioNTech is Pfizer's Covid vaccine partner, while Moderna makes a rival Covid shot.
But it remains to be seen whether Trump's nomination passes muster with the Senate — if, in fact, he does officially nominate Kennedy. RBC Capital Markets analyst Brian Abrahams notes Trump has a "tendency to change his mind last minute."
Kennedy Domination Is Destabilizing
Piper Sandler analyst David Amsellem says the Kennedy appointment will fundamentally destabilize biopharma companies.
Kennedy has promoted "scientifically-debunked views" that vaccines cause autism, and that they led to more deaths during the Covid pandemic than lives they saved.
This issue is clearly important for Pfizer stock.
The company racked up $3.68 billion in third-quarter vaccine sales. The biggest contributor was its Prevnar vaccines, which protect against pneumococcal disease, at $1.8 billion in sales. This bacteria can cause pneumonia, meningitis, bacteremia and sepsis. Behind that, the Covid vaccine developed with BioNTech, Comirnaty, generated $1.42 billion in sales.
Pfizer is also trying to grow its respiratory syncytial virus vaccine. Also called RSV, the virus causes coldlike symptoms in most people. But it can be serious for people with compromised immune systems, including older adults. Pfizer's vaccine, Abrysvo, is approved for people age 60 and older, and younger adults at increased risk of serious cases of RSV. Abrysvo brought in $356 million in third-quarter sales.
In total, Pfizer's vaccine sales grew more than 12%.
Mizuho Securities analyst Salim Syed says the vaccine worries and RFK "jitters" are "overblown."
Kennedy recently told NBC News that he's "not going to take away anybody's vaccines." Instead, he said he wants consumers to have the information available to make decisions about whether to receive a specific vaccine.
"If vaccines are working for somebody, I'm not going to take them away," he said. "People ought to have choice and that choice ought informed by the best information."
Pfizer stock has come back since Trump's announcement, thanks largely to its 2025 outlook. Company representatives didn't return a request for comment.
Will Kennedy 'Go Wild' On Pfizer Stock, Too?
Piper Sandler's Amsellem notes Kennedy also likely has user fees in his crosshairs. The Food and Drug Administration collects user fees from pharmaceutical and medtech companies to help facilitate timely decisions on whether to approve a product.
"It is not an exaggeration to asset that user fees constitute one of the most important regulatory innovations in the history of the biopharma space," he said. "Destabilizing that framework would likely have a chilling effect on the extent to which innovators would be willing to take drug development risks."
Kennedy could also have an impact on another key issue, drug pricing. It is an already touchy area for biopharma companies facing Medicare negotiations under the Inflation Reduction Act. Already, one of Pfizer's drugs is on the list — a blood thinner called Eliquis developed with Bristol Myers Squibb.
Trump has said he would allow Kennedy to "go wild" on health care. The sentiment could further drag health care stocks through the muck. Today, Pfizer stock has a poor IBD Digital Relative Strength Rating of 19, putting it in the bottom one-fifth of all stocks when it comes to 12-month performance.
"The industry values an HHS secretary who at core is competent and can be a constructive partner even when there are fundamental disagreements on policy," Piper Sandler's Amsellem said. "This nomination however strikes us as straight out of the 'burn it all down' ethos of the president-elect, who noted preelection that he would let RFK 'go wild' on public health issues."
Can Starboard Turn Around Pfizer Stock?
Beyond Kennedy, Starboard could prove to be a thorn in Pfizer's side.
It's unclear if the activist investor is looking for a short-term win or a long-term change in Pfizer and Pfizer stock, Keith Meyer told Investor's Business Daily. Meyer is the global practice leader of board services for recruiting firm Major, Lindsey & Africa.
A short-term win could look like a 15% boost in the stock price to wrap up the books on 2024. But if Starboard is in for the long haul, it could look to take several board seats over the next 12 to 18 months. The latter is more likely, says Meyer.
Starboard recently laid out its complaints about Pfizer. The investor says Pfizer has underperformed its peers and the broader market since 2019. That includes its research and development, as well as returns on those R&D costs, its capital allocation — including some big takeovers — and lackluster forecasting/budgeting.
But Pfizer stock dropped only a fraction on Oct. 22, the day Starboard put out its presentation.
"I think there's low odds here of a material impact relative to Pfizer's future," Meyer said.
In mid-November, Pfizer appointed Chris Boshoff as chief scientific officer, taking over for Mikael Dolsten, who announced his departure in July. Boshoff is currently Pfizer's chief oncology officer. But the appointment is likely to do little to satisfy Starboard, said Jeff Jonas, of Gabelli Funds.
"It's an internal promotion, and cancer obviously remains their focus point given the Seagen acquisition as well as everything else in their sales and R&D pipeline," he said in an email to IBD. "This wasn't done in response to Starboard Value, but I don't think it's the kind of change Starboard is looking for as I think they would've preferred someone external."
Pfizer's Pipeline Could Be Key
There's not much for Starboard to monetize for a quick win, Leerink Partners analyst David Risinger said in a note. Pfizer has already trimmed its costs significantly. Its debt levels remain high and could only be partially reduced by selling its stake in noncore holdings like Haleon.
But Pfizer has already trimmed its Haleon stake, spun off from GSK, to 15% from 22.6%, CFRA analyst Sel Hardy said in a report to clients. Recent reports have suggested the company could sell its hospital products division.
"I think the overall campaign is about forcing Pfizer to follow through on their existing cost-cutting plans, rather than a drastic change in direction," Gabelli's Jonas said.
Ultimately, investors in Pfizer stock will simply have to wait for the pipeline to bear out, says Meyer, of Major, Lindsey & Africa. Wall Street is closely watching Pfizer's efforts to develop a weight-loss drug, though it has faced multiple setbacks. The company also just launched a gene therapy to treat hemophilia B. Sales of its treatment for a heart condition, Vyndaqel, are also growing markedly.
"I think Pfizer has a pipeline of drugs that will be better than when Ian Read was CEO," he said. "But it's not like you can time these drug launches and commercialization spikes to hit perfectly to overlap the missed profits from Covid."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
