Why Pfizer’s stock has hit its limit, according to an analyst

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While this week Americans are rolling up their sleeves for the Covid-19 vaccine developed by

Pfizer

and

BioNTech,

Randall Stanicky, an analyst at RBC Capital, says Pfizer’s performance is “nothing short of remarkable”. In a note on Wednesday, the analyst notes that Pfizer has marketed the vaccine in record time, while declining to give federal money to rival developers, including Moderna.

But with Pfizer’s stock (ticker: PFE) hitting a $ 38.71 closing price on Tuesday, up from the March 2020 low of around $ 26, Stanicky says Pfizer’s vaccination opportunity has been fully discounted in its stock price. His note drops the stock from Outperform to Sector Perform – similar to a Hold. He also lowered his price target from $ 43 to $ 42.

“We see it as a likely reach in the short term,” the RBC analyst writes.

Wednesday afternoon, Pfizer shares were down 1.7% to $ 38.06

S&P 500

rose 0.2%. BioNTech stock fell 5.5% to $ 105.09.

Investors have sold stocks of vaccine because of this week’s good news, including a report from the U.S. Food and Drug Administration indicating that the agency is likely to approve a Moderna (MRNA) vaccine. Moderna stock is down all week, from $ 160 to $ 137 on Wednesday.

Pfizer’s recent stock price largely expects the company to sell most of the 1.3 billion doses of Covid vaccine it says it can produce by 2021. Stanicky’s financial model predicts that Pfizer and BioNTech will sell just over a billion doses next year, at $ 19.50 per dose. , with about 45% of those sales in the U.S. The resulting $ 20 billion in vaccine revenues would make up 45% of Pfizer’s global sales for 2021, he estimates, and 90 cents of the roughly $ 3.50 per share in adjusted revenue he predicts.

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But there will be other Covid vaccines, including a rival offering from Moderna that is likely to receive US approval this week. If the pandemic ends, the Covid vaccine market will also shrink, reducing sales of the Pfizer / BioNTech injections to a few billion dollars a year, he concludes.

The analyst has not changed his constructive view of the rest of Pfizer’s business, which he believes will increase revenues by 10% per year as the company has split off its slower-growing products into an entity called

Viatris

(VTRS). But the company will face patent expiration after 2026, and the RBC analyst is not convinced that the development pipeline of things like gene therapies will be mature enough to make up for lost sales.

“Pfizer deserves credit for crossing the finish line with its first vaccine to market,” Stanicky writes. But the best scenario for selling Covid is priced into inventory, he concludes.

Write to Bill Alpert at [email protected]