Pfizer's stock plummets as Covid-19 vaccine sales collapse
- Pfizer's stock has dropped 7% as concerns rise over future vaccine sales under new government leadership.
- The company reported a sharp 42% decline in 2023 revenue to $58.5 billion, contrasting a surge seen during the Covid-19 pandemic.
- Despite challenges, Pfizer is expected to recover, with analysts estimating its stock value significantly above its current price.
In recent months, Pfizer has faced significant challenges as its stock, listed on the NYSE under the ticker PFE, has dropped 7%. The decline is largely attributed to falling Covid-19 vaccine sales, which have weighed heavily on the company's performance. Concerns have arisen regarding the future landscape of vaccines given the new government led by Robert F. Kennedy Jr., a figure known for his anti-vaccine stance. The company's financial metrics also reflect this downward trend, with adjusted earnings plummeting by 37% from $4.06 in 2021 to $2.58 now. Pfizer's market perspective took a hit as its trailing price-to-earnings ratio fell by 21%. In contrast to the remarkable revenue increase from $41.7 billion in 2020 to $100.3 billion in 2022 fueled by demand for its Covid-19 vaccine and antiviral treatment, 2023 has turned that tide, with an alarming 42% drop in year-over-year sales to $58.5 billion. To mitigate financial losses, the company is focusing on new growth avenues, both through its existing pipeline and strategic acquisitions. The acquisition of Seagen for $43 billion in December 2022 has been framed as a key move to revitalize Pfizer’s pipeline, aiming for eight blockbuster drugs by 2030. Despite this optimistic outlook, investors are currently wary. An activist investor named Starboard recently acquired a $1 billion stake in Pfizer, criticizing the company for overspending on acquisitions and heightening scrutiny regarding its strategic moves. This activist engagement reflects broader investor concerns about Pfizer’s management of its resources amid declining revenue and profit margins. From 2021 to 2022, Pfizer's adjusted net margin increased impressively from 28.5% to 37.6%. However, this positive trend dwindled, with net margins falling to 18.0% by 2023. Throughout this turbulent period, PFE stock performance has shown remarkable volatility when compared to the S&P 500, with returns of 67% in 2021, -10% in 2022, and an alarming -41% in 2023. Currently, analysts rate Pfizer’s stock as undervalued, estimating its share price at $36, which is more than 35% above the current level of around $26. The sentiment among investors appears conflicted, but there are signs that the company might bounce back as it improves profitability and addresses its declining sales.