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Pfizer: Shares Are Overvalued but the Developing Covid Story Remains a Catalyst

There’s a new Covid variant in town which scared the pants off the market on Friday and sent all the major indexes into a tailspin. However, while the new Omicron Covid variant could spell bad news for practically everyone, one segment of the stock market took the alarming development as a bullish signal. In a case of March 2020 déjà vu, WFH stocks charged ahead on the news and so did those belonging in the segment of the market known as coronavirus stocks.

Pfizer (PFE) was among the winners, climbing by 6% and further adding to 2021’s very impressive returns. The stock is up by 46% year-to-date.

In a bleak yet undeniable way, Covid-19 has been good for Pfizer stock. The success of Pfizer/BioNTech’s Covid-19 vaccine Comirnaty has propelled shares forward and the excellent results from the testing of the company’s Covid pill have further added to the bullish sentiment. These are likely to determine the stock’s trajectory more than the results shown from the tests of other drugs in the company’s pipeline.

In fact, last week the company provided an update from the development of its collaboration with Ionis on cardiovascular medication vupanorsen.

While the press release had little info in it, following 24 weeks of treatment, the Phase 2b trial met the primary endpoint of reducing non-HDL-C (Non-HDL cholesterol), and the secondary endpoints of reducing triglycerides and ANGPTL3 levels across all doses tested. However, the safety profile appears questionable as patients treated showed dose-dependent increases in liver enzyme.

“We see the data as mixed,” said Mizuho’s Vamil Divan, “With the study meeting its primary efficacy endpoint and certain secondary endpoints, but the side effect profile raising questions on the product’s longer-term potential.”

The next few weeks should see other pipeline updates, but Divan expects these will also take a backseat to the constantly developing Covid story.

“We believe investor attention will primarily be on the progress Pfizer is making on the COVID-19 front, with data for Comirnaty in children aged 2-5 and regulatory action on Paxlovid in high-risk patients expected soon, along with likely announcements of additional governmental agreements for both,” the analyst summed up. Not to mention, the pharma giant is also likely to provide info on how it plans to combat the new variant.

Still, Divan evidently thinks the stock is overvalued; the analyst’s $44 price target suggest shares will lose ~17% of their value over the 12-month timeframe. The analyst reiterated a Neutral (i.e., Hold) rating. (To watch Divan’s track record, click here)

It’s mostly Holds from Divan’s colleagues too – 8, in fact. However, with 4 additional Buys, the stock has a Moderate Buy consensus rating. That said, most believe the shares have soared more than enough for now; going by the $50.77 target, the stock will drift ~4% south over the coming months. (See PFE 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.