The COVID-19 vaccine boom is over, and with the WHO removing its PHEIC (public health emergency of international concern) status in early June, it seems doubtful that Pfizer (NYSE:PFE) or Moderna (NASDAQ:MRNA) will be able to pick up traction over the medium term.
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Indeed, COVID-19 is still technically a pandemic, but with life back to normal for the most part, nobody seems to care (or want) to talk about COVID-19 anymore. Undoubtedly, the past few years were grueling, especially for those locked down for many months on end. Even if there’s a particularly alarming resurgence of a new variant, it really does seem like the disease has entered the endemic stage.
Shares of Pfizer and Moderna are down big since peaking in the back half of 2021. It’s been a painful drop for both companies, with PFE and MRNA shares now down 41% and 76%, respectively, from their all-time highs.
Therefore, in this piece, we’ll check in with Pfizer and Moderna using TipRanks’ Comparison Tool to determine if there’s any value in the vaccine firms.
Pfizer (NYSE:PFE)
Pfizer stock looks like a value trap these days, with shares retreating rapidly despite the single-digit price-to-earnings (P/E) multiple. Earnings are expected to erode as demand for vaccinations and oral COVID-19 treatments continues to dissipate. The stock currently goes for 7.3 times trailing P/E (on a GAAP basis) but more than 13.5 times forward P/E. Undoubtedly, it’s tough to tell if those oversold shares are cheap. I personally don’t think they are — not given the forces pressuring the company’s earnings. For now, I am bearish.
Not only is the COVID-19 franchise a shell of its former self, but Pfizer has to tackle the issue of a steep patent cliff over the next few years. Rival offerings could apply significant pressure on Pfizer’s top line through 2030. It’s a big problem for Pfizer as its COVID-19 business dwindles. While Pfizer has put its COVID-19 windfall toward acquisitions (think the pick-up of cancer-focused biotech firm Seagen for $43 billion), I’m not so sure Pfizer can buy its way out of the cliff to come.
Pfizer is reportedly to withdraw and refile with the FTC with hopes of getting the deal approved. Undoubtedly, regulatory hurdles are ahead, but Seagen investors want to deal to happen. As a $213 billion behemoth, Pfizer will probably face more regulatory scrutiny from future deals.
For now, Pfizer stock seems like a pass. The 4.23% dividend yield is tempting, but the patent cliff ahead is steep, and if the company can’t acquire its way to offset revenue pressures, the stock could stand to stumble further.
Investors are running out of patience, and frankly, you can’t blame them.
What is the Price Target for PFE Stock?
Pfizer is a Moderate Buy based on six Buys and nine Holds assigned in the past three months. The average PFE stock price target of $47.54 implies 30.5% upside potential from here.
Moderna (NASDAQ:MRNA)
Moderna’s profits have fallen off a cliff, and it remains unclear as to how Moderna will find its way from here without another blockbuster coming out of the pipeline. Unlike Pfizer, Moderna isn’t as well-diversified when it comes to its cash makers. Though Moderna doesn’t have the firepower to acquire a biotech heavyweight, it can make moves to improve progress with its overall mRNA business.
The company recently bought Japanese DNA supplier OriCiro Genomics in a deal worth $85 million. It’s a bite-sized deal but a remarkable first for the company many of us had never heard of before the COVID-19 pandemic struck.
It’s hard to tell if another big moneymaker will come from the mRNA pipeline. Regardless, it shows tremendous promise, and CEO Stéphane Bancel is a brilliant leader. As speculative as it can be to play an innovative biotech, I still view Moderna as an innovator worth betting on, especially at these depths. I’m staying bullish but do acknowledge the speculative nature of the stock.
What is the Price Target for MRNA Stock?
Moderna stock sports a Moderate Buy consensus rating with six Buys, four Holds, and one Sell from Wall Street analysts. At writing, the average MRNA stock price target of $224.30 implies a giant 85.9% gain from here.
Conclusion
Pfizer and Moderna have been doing their best to prepare for the post-COVID era. Despite the efforts, it has been tough to keep earnings growth strong with the decay of the COVID franchises. We have Pfizer and Moderna to thank for their innovations during the pandemic. That said, the stock market is all about “What have you done for me lately?”
Regarding Pfizer and Moderna, the answer is not enough to convince investors to pile back into the shares of the former pandemic-era winners.
