Skip to Content
Stock Analyst Update

Pfizer Faces Modest Pressures in Q3

The wide-moat drug manufacturer plans to release key data on COVID-19 vaccine shortly.

Mentioned: ,

Pfizer (PFE) reported third-quarter results that were slightly below our expectations and largely in line with consensus S&P CapIQ estimates, and we don’t expect any major changes to our fair value estimate. We continue to view the company as undervalued, with the market not likely fully appreciating Pfizer's emerging immunology pipeline and strong entrenchment in vaccines, which also supports the firm’s wide moat.

In the quarter, total sales fell 4% year over year as generic pressures and pandemic-related treatment delays weighed on the top line, but we expect an acceleration of growth in 2021 as European Ibrance (breast cancer drug) pricing stabilizes and COVID-19 vaccine sales emerge. Despite over 25% volume growth for Ibrance internationally, the region's sales were up only 1% operationally, largely due to discounting in Europe that should annualize in late 2020, setting up strong growth in 2021 in the metastatic patient group.

Pfizer continues to make excellent strides in developing a vaccine for COVID-19, with efficacy and safety data expected in late October to November, setting up potential emergency use authorization by the end of the year. We project $7.5 billion in vaccine sales for Pfizer in 2021 based on a 60% probability of success, but close to half of these profits will go to partner BioNTech (BNTX). We expect heavy COVID-19 vaccine competition to emerge in 2021, leading to a rapid decline in sales by late 2022. Nevertheless, the strong bolus of sales in 2021 should help Pfizer financially and engender goodwill with the U.S. government that could be used to moderate any new potential drug pricing policies.

Other pipeline advancements include the strong data for the next generation Prevnar vaccine and the submission of immunology drug abrocitinib. While we expect the improved Prevnar vaccine will likely largely defend the current franchise, abrocitinib looks poised to develop into a major blockbuster based on strong efficacy and convenient dosing.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Damien Conover does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.