Pfizer shares sink after it resets 2024 COVID expectations (updated)
13/12/2023 22:11
(Updates with closing share prices in pargraphs 8 and 9)
By Leroy Leo and Michael Erman
Dec 13 (Reuters) - Pfizer PFE.N on Wednesday forecast
2024 sales that could be as much as $5 billion below Wall Street
expectations, a move top executives said provided a more
reliable view of its COVID-19 business than it had this year,
driving shares to a 10-year low.
Revenue from Pfizer's COVID-19 vaccine and treatment, which
peaked at $57 billion in 2022, are now expected to be $8 billion
in 2024, a further drop from the $13 billion analysts' forecast
and Pfizer's own lowered view of $12.5 billion for this year.
"We want to be conservative," Pfizer Chief Executive Officer
Albert Bourla said on a conference call with investors. "We want
to be reliable so we won't create uncertainty (again), which was
the case, unfortunately, this year."
Pfizer used some of its COVID windfall to acquire companies,
including a $43 billion deal for cancer drugmaker Seagen it
expects to close this week, and began selling a new RSV vaccine.
But the recent RSV launch has been disappointing, trailing a
rival's shot, and shares have fallen 44% so far this year.
In addition, COVID vaccinations in the U.S. have dropped
sharply with just about 17% of the eligible population getting
the most recent updated boosters due in part to declining
concern about the virus, as well as vaccine fatigue.
The New York-based drugmaker also forecast 2024 adjusted
profit in the range of $2.05 to $2.25 per share, lower than
analysts' expectation of $3.16.
Pfizer shares closed down another 6.7% on Wednesday, losing
nearly $11 billion in market capitalization.
U.S. shares of Pfizer's German vaccine partner BioNTech
22UAy.DE fell 5.5%, while COVID vaccine rival Moderna MRNA.O
rose 0.7%.
"They're in a bad place honestly," said Jeff Jonas,
portfolio manager for Gabelli Funds, which owned over 750,000
Pfizer shares as of September, according to LSEG data.
Jonas said the company has taken on a lot of debt to do
deals like Seagen. But he is skeptical the company has done
enough to fully offset lost revenue from drugs expected to face
generic competition in coming year.
"They're stuck in their ways and then they're not
necessarily going to make the type of bold move that they need
to reinvigorate R&D," Jonas said of research and development.
Seagen is expected to add $3.1 billion to revenue next year.
'A FLOOR FOR 2024 SALES'
The lower forecasts come a day after Pfizer said it would
reorganize its cancer division to include the Seagen
acquisition. It also raised its cost-cut target by $500 million
on Wednesday.
Pfizer now expects annual revenue in the range of $58.5
billion to $61.5 billion, compared with analysts' average
estimate of $63.17 billion, according to LSEG data.
The COVID-19 vaccine and antiviral treatment Paxlovid helped
Pfizer bring in over $100 billion in revenue in 2022. Pfizer had
originally forecast sales of $21.5 million in COVID sales for
2023, but later cut that forecast by more than 40%.
The COVID-19 sales targets "likely represent a floor for
2024 sales," said J.P. Morgan analyst Chris Schott.
The precipitous drop in COVID product sales had also forced
Pfizer to launch a program to cut jobs and expenses, which is
now expected to save at least $4 billion a year by the end of
2024.
Pfizer said on Tuesday that Chief Commercial Officer Angela
Hwang would step down, and the company would reorganize its
commercial business, not including oncology, into two divisions,
one focused on the United States and the other on the rest of
the world.
Citi analyst Andrew Baum said Pfizer's management is acting
with increasing urgency to address its weak stock performance.
However, the absence of promising high-potential pipeline assets
makes it difficult for the company with several Pfizer products
expected to go off patent in the next few years.
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Pfizer's shares underperform rivals, broader index https://tmsnrt.rs/4afelRr
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(Reporting by Leroy Leo in Bengaluru; Editing by Nick Zieminski
and Bill Berkrot)
((Leroy.Dsouza@thomsonreuters.com ; https://twitter.com/LeroyLeo7;))