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Goldman Sachs raises Pfizer stock target, keeps buy rating on Paxlovid sales

EditorNatashya Angelica
Published 10/30/2024, 11:54 PM
© Reuters
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On Wednesday, Goldman Sachs maintained a Buy rating on Pfizer Inc. (NYSE: NYSE:PFE) shares, while increasing the stock's price target to $33.00 from $32.00. The adjustment follows Pfizer's third-quarter earnings, which surpassed expectations primarily due to strong sales of its COVID-19 treatment, Paxlovid.

Despite the positive financial results, Pfizer's shares dipped 1.4% on the day of the announcement, underperforming compared to the Health Care Select Sector SPDR Fund (XLV), which saw a lesser decline of 0.3%.

The company's third-quarter success was attributed significantly to Paxlovid, leading to an updated fiscal year 2024 guidance for the drug, increasing by $2 billion. However, the total revenue forecast was only raised by $1.5 billion. This discrepancy, partially due to the discontinuation of Oxbryta, prompted investor concerns about potential weaknesses in other segments of Pfizer's business.

During the earnings call, management focused on the Oncology division, which met expectations, and highlighted promising pipeline assets acquired from Seagen.

Noteworthy pipeline developments include two oral small molecules targeting obesity, with one in Phase 2 trials identified as a GIP antagonist, and a once-daily GLP-1 molecule in Phase 1. Moreover, Pfizer is progressing with pneumococcal conjugate vaccine candidates that cover 25 and 30 serotypes, respectively.

Pfizer's Chief Strategy and Innovation Officer, Andrew Baum, provided insights during the question and answer session, offering affirmations of the company's confidence in its research and development capabilities. Investors can expect further details on the company's outlook, as Pfizer plans to provide 2025 guidance in mid-December.

The revision of the price target to $33 reflects updates to Goldman Sachs's financial model for Pfizer, taking into account the latest earnings and the pharmaceutical giant's future prospects.

In other recent news, Pfizer Inc. has seen significant developments. The company has raised its annual profit forecast following robust third-quarter performance, primarily due to strong COVID-19 treatment sales. The upward revision comes after Pfizer reported an adjusted earnings of $1.06 per share, surpassing the consensus estimate of 62 cents provided by analysts.

Pfizer's profit forecast uplift comes amidst ongoing pressure from Starboard, an activist hedge fund. The fund has urged the company to deliver on its turnaround promises and has been insistent on Pfizer's board to ensure that the management is held responsible for any underperformance.

Pfizer has also acquired cancer drugmaker Seagen in a deal valued at $43 billion and implemented cost-cutting strategies projected to save up to $5.5 billion by 2027. The U.S. Centers for Disease Control and Prevention's Advisory Committee on Immunization Practices (ACIP) has voted to recommend the broader use of Pfizer's pneumococcal vaccine, PREVNAR 20®, for adults aged 50 and above.

Moreover, Pfizer has received U.S. Food and Drug Administration approval for the expanded use of its respiratory syncytial virus (RSV) vaccine, ABRYSVO®, for adults aged 18 through 59. These are the recent developments at Pfizer Inc.

InvestingPro Insights

To complement Goldman Sachs' analysis, InvestingPro data offers additional insights into Pfizer's financial health and market position. Despite the recent dip in share price, Pfizer maintains a substantial market capitalization of $161.27 billion, underscoring its position as a major player in the pharmaceutical industry.

Investors may find comfort in Pfizer's dividend policy. According to InvestingPro Tips, Pfizer has raised its dividend for 14 consecutive years and has maintained dividend payments for an impressive 54 consecutive years. The current dividend yield stands at a notable 5.9%, which could be attractive for income-focused investors, especially in light of the company's recent stock performance.

While Pfizer's revenue for the last twelve months as of Q2 2024 was $55.17 billion, it's important to note that the company experienced a revenue decline of 29.65% over this period. This aligns with the concerns raised about potential weaknesses in segments outside of Paxlovid sales. However, InvestingPro Tips suggest that net income is expected to grow this year, and analysts predict the company will return to profitability, which could support Goldman Sachs' optimistic outlook.

For those considering Pfizer's stock, it's worth noting that InvestingPro lists 11 additional tips for PFE, providing a more comprehensive view of the company's financial situation and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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