U.S. officials inked a new deal to secure 100 million additional doses of Pfizer‘s (PFE) coronavirus vaccine. But Pfizer stock still remains well off its 2020 high mark.
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The new agreement brings the total supply of Pfizer and BioNTech (BNTX) vaccine doses in the U.S. up to a total 200 million. That’s enough to inoculate 100 million people.
Before that, the Food and Drug Administration authorized the vaccine for emergency use in people ages 16 and older. Vaccinations began in December in the U.S. — a week behind the U.K.
In the U.K., two recipients of the vaccine experienced allergic reactions following administration. Pfizer emphasized it hasn’t seen that side effect among its 44,000 participants in clinical testing. Still, PFE stock was under pressure in December on the news.
The coronavirus vaccine also gained authorization in Canada.
In another track, Pfizer in early October said its first patients had been dosed in a Phase 3 test of a hemophilia A drug, in a partnership with Sangamo Therapeutics (SGMO). That could shake a key rival, BioMarin Pharmaceutical (BMRN).
And Pfizer recently completed its merger with Mylan’s generic and off-patent drugs unit, known as Upjohn.
So, all things considered, is Pfizer stock a buy right now?
Pfizer Stock Fundamentals: Earnings Hit The Skids
Pfizer is one of the biggest pharmaceutical companies. But Pfizer’s year-over-year sales have declined each of the past six quarters. Analysts polled by FactSet expect that to change in the fourth quarter. Then, they expect sales inch 1% higher to $12.88 billion.
Adjusted earnings are also expected to dip 2% in the fourth quarter to 54 cents per share. That follows five quarters in decline.
Big institutional investors — who account for up to 70% of all market trades — usually look for stocks with accelerating earnings and sales growth.
Further, PFE stock isn’t meshing with CAN SLIM rules for investing, which tell investors to seek stocks with year-over-year earnings-per-share increases of at least 25%. Investors should also keep an eye out for stocks with 20%-25% sales growth in the most recent quarter.
Pharmaceutical Company’s Annual Metrics
Pfizer sales declined 4% last year to $51.75 billion. In fact, over the past nine years, Pfizer has posted annual sales growth in just two years. In both years — 2016 and 2018 — sales growth remained in the single-digit percentage range.
The last year of strong gains for Pfizer was in 2010, when total revenue jumped 34%
The pharmaceutical company had eight drugs that each brought in at least $1 billion in sales, known as blockbusters, in 2019. Top sellers included a pneumonia vaccine, a cancer drug and a blood thinner that it produces in partnership with Bristol-Myers Squibb (BMY).
The three drugs generated 29% of total revenue. All three posted year-over-year gains. Sales of pneumonia vaccine Prevnar 13 inched up 1% to $5.85 billion. Revenue from anticoagulant Eliquis popped 23% to $4.22 billion. Cancer treatment Ibrance generated $4.96 billion in sales, up 20%.
Merger Completed After Older Drugs Struggled
But older drugs struggled in 2019. The Upjohn unit contains Pfizer’s established brands and drugs facing generic competition. Sales of those medicines plunged 18% to $10.23 billion. Pfizer just combined its Upjohn unit with Mylan to establish a new pharma company called Viatris (VTRS).
Fibromyalgia treatment Lyrica and erectile dysfunction drug Viagra took the biggest hits. Lyrica sales tumbled 33% to $3.32 billion. Revenue from Viagra slipped 22% to $497 million. Both are now facing competition from generic knockoffs.
In 2020, analysts surveyed by FactSet call for Pfizer to earn $2.89 per share, minus some items, down 2%. Sales are expected to fall 5% to $49.1 billion.
In addition to its Mylan combination, Pfizer also has a joint venture with GlaxoSmithKline (GSK) for a consumer health care business comprised of their over-the-counter products. Under terms of the deal, Pfizer owns a 32% stake in the joint venture, and GSK owns 68%.
Now, GlaxoSmithKline is planning to spin off that combined consumer health care business.
PFE Stock News: Gene Therapy, Cancer Studies
In August, S&P Dow Jones Indices announced its first changes to the Dow Jones Industrials since 2018.
Pfizer got bounced, along with Exxon Mobil (XOM) and Raytheon Technologies (RTX). Amgen (AMGN), Salesforce.com (CRM) and Honeywell International (HON) got added. PFE stock fell on that news, though only 1.1%.
In mid-June, Pfizer and Sangamo unveiled the results of a gene therapy study in hemophilia A. In this genetic disorder, patients’ bodies don’t make enough of a blood-clotting protein called Factor VIII. But all five patients who received the gene therapy showed sustained Factor VIII levels after nine weeks. None required additional Factor VIII treatments or had bleeding episodes.
But in early June, PFE stock tumbled more than 7% in one day after cancer drug Ibrance failed to make a difference in patients with a form of breast cancer. Patients received Ibrance plus standard endocrine therapy. Later that month, a rival treatment from Eli Lilly (LLY) succeeded in an early-stage breast cancer treatment test.
On Oct. 1, Pfizer announced that its investigational gene therapy candidate to treat Duchenne muscular dystrophy in boys received a Fast Track designation from the U.S. Food and Drug Administration. Most analysts say Sarepta Therapeutics (SRPT) still has a leg up on Pfizer in treating this muscular disease.
On Oct. 9, the company said a Phase 3 clinical trial of its drug Ibrance in treating certain types of early breast cancer did not meet its primary goal.
Pfizer Stock Rises On Coronavirus Vaccine
Pfizer and BioNTech are in the lead with a coronavirus vaccine. The U.S., U.K. and Canada have authorized the drug for emergency use. That was based on Phase 3 testing showing the Covid-19 vaccine was 95% effective at blocking the virus.
Researchers analyzed 170 cases of Covid-19 from among study participants. Of those cases, 162 occurred in the placebo group. Just eight volunteers who received the vaccine contracted Covid-19.
U.K. health officials are investigating two allergic reactions in recipients. Pfizer and BioNTech have agreed to supply the U.K. with up to 40 million doses in 2020 and 2021. The companies say they can make 50 million doses in 2020 and 1.3 billion in 2021.
The U.S. government has a deal for 100 million doses and an option to buy 500 million more. Pfizer and BioNTech also have deals in Canada and Japan, as well as an agreement to sell 300 million doses to the European Commission.
Side effects have been limited in testing groups. Following either shot, 3.8% and 2% of volunteers, respectively, reported severe fatigue or headache. In the FDA’s briefing documents, the companies noted four cases of Bell’s Palsy and 64 cases of enlarged lymph nodes in vaccinated participants.
The coronavirus vaccine relies on the body’s own machinery to produce a specific substance meant to ignite an immune response. Moderna (MRNA) and Translate Bio (TBIO) are also both testing coronavirus vaccines using the same messenger RNA technology.
Pfizer, BioNTech Still In Coronavirus Vaccine Lead
Fellow vaccine makers include AstraZeneca (AZN) and its partner, University of Oxford. In a Phase 3 test, their coronavirus vaccine proved, on average, 70.4% effective at preventing Covid-19. A regimen that included a half dose followed by a full dose a month later was 90% effective. But AstraZeneca says it needs to do more testing on that regimen.
Their Phase 3 study began in July but was paused in September after a participant became seriously ill. In October, AstraZeneca said it had restarted the study after receiving clearance in five countries.
Moderna began its Phase 3 study in late July, the same day Pfizer and BioNTech began theirs.
In late September, both Johnson & Johnson (JNJ) and Novavax (NVAX) announced the start of Phase 3 testing for the Covid-19 vaccine candidates. J&J paused its trial on Oct. 12 after a participant became ill, but said it was preparing to resume recruitment on Oct. 23.
Pfizer and BioNTech have supply deals with the U.S. and U.K. for their coronavirus vaccine. They will supply the U.K. with 40 million doses. The U.S. government will pay $3.9 billion for 200 million doses of their coronavirus vaccine, with an option to buy an additional 300 million.
Supply deals with Japan and Canada followed. In November, the companies confirmed a supply deal with the European Commission for 200 million doses.
Technical Analysis: PFE Stock Breaks Out
Pfizer stock briefly broke out on Nov. 9 after shares topped a buy point at 39.55 out of a flat base. But shares couldn’t hold onto their gain and ended the regular session below that entry.
Pfizer stock later fell as much as 9.4% below that entry on Nov. 17. That triggered a sell rule when shares tumble 7%-8% below their entries.
As of midday trading on Dec. 24, shares were above their 50-day moving average but below their 200-day line.
(Related: Keep tabs on chart patterns by visiting IBD’s MarketSmith.com.)
Shares of Pfizer have a poor IBD Composite Rating of 35. The 1-99 measure pits a stock’s key growth measures against all other stocks. Leading stocks tend to have CRs of 95 or better, according to IBD Digital.
Pfizer stock also has a weak IBD Relative Strength Rating of 28 out of a best-possible 99. The RS Rating measures a stock’s 12-month running performance against all other stocks. That RS Rating means Pfizer stock tops 28% of all stocks in terms of performance.
The pharmaceutical company’s EPS Rating, a measure of profitability, is a 68 out of a best-possible 99. The EPS Rating compares a stock’s recent and longer-term earnings growth against all other stocks.
So, Is Pfizer Stock A Buy Right Now?
Based on CAN SLIM rules of investing, PFE stock isn’t a buy right now. Shares briefly topped a buy point out of a flat base on Nov. 9, but couldn’t hold onto their gain. It’s best to buy a stock when it’s within 5% above a buy point.
Pfizer stock has mostly run up since Thanksgiving, but that was after triggering a sell rule.
Further, the pharmaceutical company is set to report sales growth in the fourth quarter, but that growth won’t be bullish enough to line up with CAN SLIM advice.
It is important to keep tabs on how Pfizer stock performs as it develops a coronavirus vaccine with BioNTech. Results appear promising so far, but it will be important to see how the company ramps its manufacturing now that it has authorization in the U.S.
Pfizer and BioNTech’s vaccine must be stored at ultra-cold temperatures. In comparison, Moderna says its vaccine is stable at standard refrigeration temperatures for 30 days.
To find the best stocks to buy and watch, check out IBD Stock Lists. Make sure to also keep tabs on stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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