Analyst Note
| Damien Conover, CFA |Pfizer reported second-quarter results slightly ahead of our and consensus expectations, but we don’t expect any significant fair value estimate changes based on the minor outperformance. We continue to view the stock as undervalued, with the market likely underappreciating the firm’s strong immunology pipeline and entrenchment in vaccines. Pfizer’s recent stock appreciation appears partly driven by the firm’s progress with a COVID-19 vaccine along with its partner BioNTech, but we would urge caution in ascribing significant value related to the COVID-19 vaccine; a long duration of COVID-19 vaccine cash flows seems unlikely due to the probable entry of competitive, not-for-profit vaccines and potentially less demand following the pandemic period. Nevertheless, Pfizer’s remarkable ability to potentially bring a vaccine to the market in late 2020 shows the strength of the firm’s ability to develop innovative treatments, a core element supporting its wide moat rating.