Pfizer’s Struggles: A Closer Look at Financial Performance Amid Market Changes
With a market cap of $161.3 billion, New York-based Pfizer Inc. (PFE) stands as a prominent player in the biopharmaceutical sector. This company is recognized for its innovative drugs and vaccines, targeting various therapeutic areas such as oncology, immunology, rare diseases, and infectious diseases.
Performance Discrepancy: Pfizer vs. Market
Over the past 52 weeks, shares of Pfizer have notably underperformed the broader market. In that period, PFE stock has dipped 5.5%, contrasting sharply with the S&P 500 Index ($SPX), which has rallied 41.7%. For 2024, Pfizer shares are down 1.2%, while the S&P shows a significant 22.3% increase on a year-to-date basis.
Health Care Sector Comparison
Pfizer has also lagged relative to the Health Care Select Sector SPDR Fund’s (XLV) 20.5% returns over the past year and an 8.8% gain year-to-date.
Reasons Behind Underperformance
The decline in sales from COVID-19 vaccines and treatments has driven Pfizer’s underperformance. While sales boomed during the pandemic, they have since normalized. The company’s heavy debt load, particularly from its acquisition of Seagen, compounds the issue, especially as interest rates continue to rise and the economic landscape grows more challenging.
On October 29, Pfizer’s stock fell by 1.4% amid worries about CEO Albert Bourla’s defense of controversial acquisitions criticized by activist investor Starboard Value. Despite Pfizer surpassing Q3 estimates with $17.7 billion in revenue and over $6 billion in adjusted net income, concerns about the value of these acquisitions have clouded investor sentiment. The company did, however, raise its 2024 revenue guidance to between $61 billion and $64 billion, expecting adjusted earnings per share between $2.75 and $2.95, yet skepticism remains about the long-term viability of this strategy.
Positive Outlook for the Current Fiscal Year
Looking ahead to the current fiscal year ending in December, analysts anticipate a strong performance, expecting PFE’s EPS to grow 56.5% year-over-year to $2.88. The company has a solid earnings surprise record, beating consensus estimates in each of the last four quarters.
Analysts’ Consensus on Pfizer
Out of the 22 analysts tracking Pfizer, the consensus rating remains a “Moderate Buy,” reflecting nine “Strong Buy” ratings and 13 “Hold” recommendations. This outlook shows a slight improvement from three months ago, when only eight analysts rated it as a “Strong Buy.”
Price Target Insights from Analysts
On October 29, Jefferies analyst Akash Tewari reaffirmed a “Buy” rating for Pfizer, setting a price target of $33. Currently, PFE trades below the average price target of $32.65, while the highest target sits at $45, which suggests a potential upside of 58.1%.
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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
