The world rejoiced on Monday, sensing there might be a light at the end of the dark coronavirus tunnel.
Pfizer (PFE) and partner BioNTech announced that in a late stage study, based on interim data, the partnership’s COVID-19 vaccine candidate BNT162b2 had more than 90% success in preventing the coronavirus. Furthermore, no safety issues were raised, and enough data should be available by next week in order to pursue an emergency use authorization (EUA).
PFE expects to be able to manufacture 50 million vaccine doses in 2020 and up to 1.3 billion doses in 2021.
At risk of stating the obvious, says J.P. Morgan analyst Chris Schott, the results “represent a major breakthrough in addressing the COVID-19 pandemic.”
So, with the vaccine expected to enter the market before year’s end, what are the implications for Pfizer? And what does it mean for the stock from an investing perspective? Here, Schott is not quite as exuberant.
While the analyst is in no doubt as to the quality of Pfizer’s execution on the COVID-19 program, other companies’ candidates are also in advanced stages of Phase 3 studies. Therefore, the commercial opportunity for BNT162b2 might be limited with the vaccine only in line for a cut of overall market share. Moreover, Schott argues, even before the latest news broke and sent PFE shares higher, Pfizer’s market cap already had an estimated $10-20 billion of COVID-19 vaccine value baked into its overall valuation.
“We believe PFE shares above $40 reflect a best-case scenario for the vaccine from a commercial standpoint (i.e., limited competition, endemic virus, sustained pricing). This comes despite a number of unknowns regarding the commercial market for COVID-19 vaccines (number of competitors, duration of efficacy, longer-term pricing, etc.). Along these lines, we would not be chasing PFE shares at current levels despite a best-case outcome on today’s data,” Schott opined.
To this end, Schott rates PFE a Neutral (i.e. Hold) and sticks to his $36 price target, which suggests shares will decline by 7% from current levels. (To watch Schott’s track record, click here)
Overall, PFE holds a Moderate Buy rating from the analyst consensus, based on 4 “buy” ratings and 8 “holds.” Shares are selling for $38.74, and the average price target of $41.42 implies a modest upside of nearly 7%. It also should be noted that PFE earns an 8 Smart Score on TipRanks. (See Pfizer stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
