4. Pfizer Inc. (NYSE:PFE)
Analysts’ Upside Potential: 20.03%
Pfizer Inc. is a global company that finds, develops, produces, promotes, distributes, and sells biopharmaceutical pharmaceuticals in Europe and the US. In a recent, late-stage study involving four groups of people with weakened immune systems, PFE’s respiratory syncytial virus (RSV) vaccine Abrysvo produced a robust immunological response.
Positively, Pfizer Inc. (NYSE:PFE) has made notable progress in reducing expenses. The company expects to generate $4 billion in net cost reductions by 2024 and plans to cut its cost of goods sold (COGS) by $1.5 billion by 2027. It is anticipated that the emphasis on cost reduction and manufacturing efficiency will boost margins, as seen by the revised price goal and increased EPS projections for 2025.
The annual profit forecast raise is supported by robust sales in Q2 2024 of its medication for heart disease and cancer therapies acquired through a $43 billion transaction for Seagen, even as the company suffers with a significant decline in revenue from COVID-19 products. The market for Pfizer’s COVID-19 vaccination and therapy has fallen by billions of dollars annually.
As COVID fears subsided, investors abandoned Pfizer, and the company’s shares are now trading at around half their peak during the pandemic.
However, Pfizer is also moving forward with its pipeline for obesity treatment and next-generation vaccines, even though important efficacy and tolerability data are still awaited. Pfizer Inc. (NYSE:PFE) recently confirmed that it will proceed with the development of danuglipron, an oral tablet that acts as a GLP-1 agonist and is used to treat weight reduction and diabetes. This action is a result of the twice-daily formulation’s Phase 2 trial meeting effectiveness targets despite a high rate of patient withdrawals owing to adverse effects. A notable improvement is that there is no indication of liver damage with the once-daily form of danuglipron.
On the other hand, Leerink Partners analyst David Risinger’s Hold recommendation points out concerns about Pfizer’s long-term growth forecast, despite the positive developments. Due to the loss of exclusivity on a few major products like Pfizer-BioNTech COVID-19 Vaccine, the company’s long-term EPS growth is expected to drop by 3%, which will dampen expectations for strong price appreciation, per the analyst.
Analyst Chris Schott of J.P. Morgan stated that he anticipates Pfizer’s stock to stay in the current range because of its competitors’ higher expectations and the company’s slowing revenue growth.
“We believe stronger new launch performance and/or further progress on the pipeline will be necessary to significantly change the narrative,” he stated in a research note.
Parnassus Value Equity Fund stated the following regarding Pfizer Inc. (NYSE:PFE) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
PFE is one of the best diabetes stocks to buy now since it has promising growth potential, as seen by Truist Financial analyst Sriripa Devarakonda and Chris Shibutani of Goldman Sachs’ “Buy” rating on PFE given July 31. Overall, according to 13 analysts, PFE has a consensus Buy rating with an average price target of $34.54 and an upside potential of 19.72% from the current stock price of $28.85.
