Healthcare giant Pfizer (NYSE:PFE) slashed its full-year revenue outlook by $9 billion to reflect lower-than-anticipated sales of its COVID-19 vaccine Comirnaty [developed in collaboration with BioNTech (NASDAQ:BNTX) ] and COVID-19 treatment Paxlovid. PFE shares were down 3.7% in Friday’s extended trading session. The stock is down more than 37% year-to-date.
Weak COVID Sales Weigh on PFE’s Outlook
Pfizer now anticipates 2023 revenue in the range of $58 billion to $61 billion, down from the previous outlook range of $67 billion to $70 billion. The revised guidance reflects expected revenues of $12.5 billion from Comirnaty and Paxlovid, which marks a decline of $2 billion and $7 billion, respectively, from the initial expectations.
Fewer patients are seeking treatments for COVID-19 compared to the early days of the pandemic, as vaccination and immunity have resulted in milder cases.
It is worth noting that about $4.2 billion of decline in the Paxlovid guidance is due to the reversal of revenues associated with the non-cash return of 7.9 million Paxlovid doses that were purchased by the U.S. government. Overall, Pfizer’s Q3 2023 results will include a non-cash charge of $5.5 billion related to COVID-19 inventory write-offs due to lower-than-projected demand.
The company now expects its full-year 2023 adjusted earnings per share (EPS) guidance in the range of $1.45 to $1.65 compared to the previous guidance range of $3.25 to $3.45.
Meanwhile, the company is taking measures to improve its profitability amid a tough macro backdrop. It is targeting cost savings of at least $3.5 billion by 2024, including $1 billion this year.
While Pfizer’s COVID product sales are falling, the company is confident about its pipeline generating several breakthrough treatments in the times ahead. Last week, the U.S. Food and Drug Administration (FDA) approved the company’s marketing application to expand the label for its kinase inhibitors Braftovi (encorafenib) and Mektovi (binimetinib) for lung cancer patients with a particular genetic mutation. Also, the FDA approved PFE’s medicine Velsipity to treat adults with moderately to severely active ulcerative colitis.
What is the Target Price for PFE Stock?
Even before the guidance update on Friday, J.P.Morgan analyst Chris Schott lowered his price target for Pfizer stock to $36 from $39 on October 6 and reiterated a Hold rating on the stock, saying that his estimates were below the Street’s expectations due to lower COVID-19 numbers.
Schott added that the company’s non-COVID business trends are mixed. The analyst expects PFE stock to be range-bound and sees a fairly limited downside from current levels.
Wall Street’s Moderate Buy consensus rating on Pfizer stock is based on four Buys and eight Holds. The average price target of $44.36 implies 38.2% upside potential.
