Pfizer | Fundamental Analysis | Short view
Many would agree that a half victory is better than a total defeat. Pfizer and BioNTech have seen this through firsthand experience.
The two partners had hoped that an FDA advisory committee would recommend revaccination with the COVID-19 vaccine to all Americans 16 years of age and older. A week ago, however, the committee voted 16-2 against recommending the Pfizer-BioNTech vaccine for a wide age range.
It wasn't just bad news for these drug companies, however. The FDA advisory committee also voted unanimously to recommend the boosters for U.S. citizens age 65 and older, and anyone at high risk for severe COVID-19. And now you're probably wondering, could Pfizer stock be a reasonable investment choice after this partial victory?
The FDA still has to decide whether to revaccinate the Pfizer-BioNTech vaccine. If the agency follows the commission's recommendations and the Centers for Disease Control and Prevention (CDC) agrees with them, many additional vaccines could soon become available.
As per the U.S. Department of Health and Human Services' Office on Aging, there were about 52.4 million Americans age 65 and older in 2018. Today, that number is undoubtedly higher.
Vaccination rates among older Americans are higher than any other age group. According to the CDC, nearly 85 percent of people between the ages of 65 and 74 have been fully vaccinated. Nearly 80% of Americans age 75 and older have been fully vaccinated.
We don't know how many of these people received the Comirnaty COVID-19 vaccine from Pfizer and BioNTech. However, overall, Comirnaty accounts for about 57% of all COVID-19 vaccine doses administered to date.
It is estimated that about 25 million Comirnaty revaccinations could be administered in the following months if the FDA and CDC give the green light to revaccination. Based on previous vaccine prices, the total cost of revaccination for the groups recommended by the FDA panel could approach $500 million.
At first glance, the possibility of an additional $500 million over the next few months may seem significant. However, there are several reasons not to get so excited.
Most importantly, none of the companies are likely to get "extra" money from boosters shortly. The U.S. has already ordered a total of 500 million doses from Pfizer and BioNTech, plus another 500 million doses for transfer to other countries. At least at this time, it is doubtful that extra doses will be purchased by the government to vaccinate Americans.
Keep in mind also that Pfizer and BioNTech share profits from Comirnaty. Even if the companies could expect additional orders from the U.S. government for boosters, the financial impact for Pfizer would not be huge. In the second quarter, the company had revenue of $19 billion and profits of nearly $5.6 billion.
There is really no good reason to buy Pfizer stock based on the recommendation of the FDA advisory committee. Nevertheless, there are other reasons why investors might seriously consider stock in this major pharmaceutical company.
The need for an annual refill for everyone is still a real possibility. If Pfizer can count on strong recurring revenues from Comirnaty for years to come, the stock will look much more attractive.
No doubt, Pfizer doesn't just rely on its COVID-19 vaccine. The pharmaceutical giant has other growth drivers that should appeal to investors, notably the rare heart disease drug Vyndaqel/Vyndamax and the blood-thinning drug Eliquis.
Pfizer's pipeline could bring even more big wins. A pill for COVID-19 may be on the way. The drugmaker also has more than 20 other late-stage programs. It is also adding to its portfolio through deals, including intentions to buy Trillium Therapeutics.
Last, but not least, is Pfizer's dividend. Many income investors will like the dividend yield, which is currently 3.5%.
For some investors, Pfizer stock looks like a good choice. But any endorsement for older Americans boosters isn't much of a factor in deciding whether or not to buy the stock one way or the other.
The two partners had hoped that an FDA advisory committee would recommend revaccination with the COVID-19 vaccine to all Americans 16 years of age and older. A week ago, however, the committee voted 16-2 against recommending the Pfizer-BioNTech vaccine for a wide age range.
It wasn't just bad news for these drug companies, however. The FDA advisory committee also voted unanimously to recommend the boosters for U.S. citizens age 65 and older, and anyone at high risk for severe COVID-19. And now you're probably wondering, could Pfizer stock be a reasonable investment choice after this partial victory?
The FDA still has to decide whether to revaccinate the Pfizer-BioNTech vaccine. If the agency follows the commission's recommendations and the Centers for Disease Control and Prevention (CDC) agrees with them, many additional vaccines could soon become available.
As per the U.S. Department of Health and Human Services' Office on Aging, there were about 52.4 million Americans age 65 and older in 2018. Today, that number is undoubtedly higher.
Vaccination rates among older Americans are higher than any other age group. According to the CDC, nearly 85 percent of people between the ages of 65 and 74 have been fully vaccinated. Nearly 80% of Americans age 75 and older have been fully vaccinated.
We don't know how many of these people received the Comirnaty COVID-19 vaccine from Pfizer and BioNTech. However, overall, Comirnaty accounts for about 57% of all COVID-19 vaccine doses administered to date.
It is estimated that about 25 million Comirnaty revaccinations could be administered in the following months if the FDA and CDC give the green light to revaccination. Based on previous vaccine prices, the total cost of revaccination for the groups recommended by the FDA panel could approach $500 million.
At first glance, the possibility of an additional $500 million over the next few months may seem significant. However, there are several reasons not to get so excited.
Most importantly, none of the companies are likely to get "extra" money from boosters shortly. The U.S. has already ordered a total of 500 million doses from Pfizer and BioNTech, plus another 500 million doses for transfer to other countries. At least at this time, it is doubtful that extra doses will be purchased by the government to vaccinate Americans.
Keep in mind also that Pfizer and BioNTech share profits from Comirnaty. Even if the companies could expect additional orders from the U.S. government for boosters, the financial impact for Pfizer would not be huge. In the second quarter, the company had revenue of $19 billion and profits of nearly $5.6 billion.
There is really no good reason to buy Pfizer stock based on the recommendation of the FDA advisory committee. Nevertheless, there are other reasons why investors might seriously consider stock in this major pharmaceutical company.
The need for an annual refill for everyone is still a real possibility. If Pfizer can count on strong recurring revenues from Comirnaty for years to come, the stock will look much more attractive.
No doubt, Pfizer doesn't just rely on its COVID-19 vaccine. The pharmaceutical giant has other growth drivers that should appeal to investors, notably the rare heart disease drug Vyndaqel/Vyndamax and the blood-thinning drug Eliquis.
Pfizer's pipeline could bring even more big wins. A pill for COVID-19 may be on the way. The drugmaker also has more than 20 other late-stage programs. It is also adding to its portfolio through deals, including intentions to buy Trillium Therapeutics.
Last, but not least, is Pfizer's dividend. Many income investors will like the dividend yield, which is currently 3.5%.
For some investors, Pfizer stock looks like a good choice. But any endorsement for older Americans boosters isn't much of a factor in deciding whether or not to buy the stock one way or the other.
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