Pfizer (PFE) shares rose sharply on Wednesday after the pharmaceutical giant beat analysts’ first-quarter profit forecast and posted better-than-expected sales due to its Paxlovid Covid treatment.
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Paxlovid had sales of $2.04 billion. A 50% year-over-year decline in revenue allowed them to thwart the Street’s demand for $878.2 million.
This was partly due to a one-time infusion of $771 million after the US government returned 5.1 million treatment cycles. That being said, Paxlovid sales still exceeded expectations. Comirnaty, the Covid vaccine developed by Pfizer BioNTech (BNTX) posted revenue of $354 million, down 88%. Excluding these two factors, Pfizer’s sales rose 11%.
In this morning trading, Pfizer shares rose more than 2% to 26.20. MarketSurge shows shares have reached a ceiling at their 50-day moving average. Bearishly, stocks have been trapped up to this line since early April.
Pfizer shares see “massive” upside
There was “massive” upside potential in the first quarter, Leerink Partners analyst David Risinger said in a report. According to FactSet, sales fell 20% to $14.88 billion, but comfortably beat forecasts of $13.87 billion. Adjusted profit was 82 cents per share, down 33% but above expectations of 51 cents.
In addition to strong Paxlovid sales, Risinger reported Vyndaqel sales of $1.14 billion, 25% above expectations. Vyndaqel is Pfizer’s drug for the treatment of cardiomyopathy due to hereditary transthyretin-mediated amyloidosis. In this condition, there is a buildup of abnormal proteins in the heart, causing problems.
Vyndaqel results also improved BridgeBio Pharma (BBIO) stock. Shares rose 3.2% to 26.44. BridgeBio is working on a treatment for the same condition. The market is “quite large,” estimated at over $14 billion, Salim Syed, an analyst at Mizuho Securities, said in a report.
“Today’s first quarter print (Vyndaqel) puts annual sales at about $3 billion in the US alone and about $4.5 billion globally,” he said. Syed has a buy rating on BridgeBio stock but does not rate Pfizer stock.
Less promisingly, sales of migraine treatment Nurtec – which Pfizer bought when it acquired the former Biohaven Pharmaceuticals in 2022 – fell well short of expectations at $178 million. Nurtec’s sales increased 7% compared to the previous year.
Improving gross marine levels
Evercore ISI analyst Umer Raffat noted that Pfizer achieved a gross margin of nearly 80% in the first quarter – much higher than the 70% Pfizer forecast for 2024 in December.
According to Leerink analyst Risinger, the higher gross margin was driven by a favorable sales mix, the shift to Paxlovid and cost efficiencies. Pfizer expects the company to be on track to save at least $4 billion in net costs by year-end.
This helped Pfizer improve its profit outlook for the year. Pfizer now expects adjusted earnings of $2.15 to $2.35 per share. The midpoint of Pfizer’s forecast was just above forecasts at $2.21. Pfizer maintained its revenue forecast at $58.5 billion to $61.5 billion, while expectations were for $59.94 billion.
Risinger reiterated its market performance rating on Pfizer stock. Raffat shares are outperforming.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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