Pfizer stock fell Tuesday after a Wells Fargo analyst downgraded shares and said the drug giant needs a "Covid reset."
Wells Fargo analyst Mohit Bansal downgraded Pfizer shares to an equal weight rating from overweight during the Monday holiday. On Tuesday, Pfizer stock slipped 3.7% to close at 46.08. Bansal also trimmed his price target to 50 from 54.
"We think Pfizer needs a Covid reset before the stock could work again," he said in a note to clients. He applauded the company's efforts to grow its top line through research efforts and buyouts. "However, it could take time for investors to appreciate this given future (mergers and acquisitions) is an important component."
Pfizer Stock: Paxlovid Questions Abound
The lion's share of angst surrounding Pfizer stock lies in Paxlovid, its antiviral Covid pill. The U.S. government likely has more than 12 million courses or 60% of its drug supplies still in hand. This could make 2023 sales lower than Pfizer stock analysts expect. Further, demand in China likely won't take off without national reimbursement.
"Real use has been lower than expected," Bansal said.
He expects Paxlovid to ultimately generate $8.2 billion in sales this year, well below the Street's higher call for $13.2 billion. Comirnaty, Pfizer's BioNTech-partnered Covid vaccine, could bring in $13.4 billion in sales, Bansal said. Still, analysts have a bigger forecast for $17.8 billion.
"While the 2023 Comirnaty number could move higher than our estimate of $13.4 billion, Pfizer typically guides for contracts in hand and they have about $13 billion of contracts as of calendar year 2023 as of the last 10Q (filing with the Securities and Exchange Commission)," he said.
Shares Have Fallen Off In 2023
Pfizer stock is currently consolidating with a buy point at 61.81, according to MarketSmith.com.
Shares have pulled back recently, however. In the first two weeks of the year, Pfizer has fallen about 10% as of Tuesday's close on today's stock market.
The reset for Pfizer shares could come when the company provides 2023 guidance on its fourth-quarter earnings conference call, Bansal said.
In the meantime, the Relative Strength Rating of Pfizer stock has fallen to 43 out of a best-possible 99. This puts shares in the bottom half of all stocks in terms of 12-month performance, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
