Pfizer Inc. (NYSE: PFE) is one of the current frontrunners for a COVID-19 vaccine, so why is its stock down 13% year to date? Low valuations have plagued this stock, but a number of factors say this stock could run much higher, at least according to one independent research firm.
The firm, Argus, reiterated a Buy rating for Pfizer with a $55 price target, which implies an upside of 62% from the most recent closing price of $34.03.
Last week, Pfizer and BioNTech S.E. (NASDAQ: BNTX) released results for their vaccine candidates, and these were ultimately positive. Going forward, the companies are seeking to progress to a large global Phase 2b/3 safety and efficacy trial, which may involve up to 30,000 healthy participants and is expected to begin in late July.
Pfizer and BioNTech are gearing up for the at-risk manufacturing of the vaccine candidate. If ongoing studies are successful and regulatory approval is secured, the companies expect to manufacture up to 100 million doses by the end of 2020 and potentially more than 1.2 billion doses by the end of 2021.
Also worth noting here is that Pfizer is in the process of spinning off Upjohn, but this restructuring has taken some time. There is stronger upside ahead once this really gets rolling.
Argus sees stronger topline growth in 2021 and beyond as the company moves past the spinoff of the Upjohn business, which will be combined with Mylan. The firm has a favorable view of the Pfizer’s spinoff strategy and plans to focus on its faster-growing Biopharma business. Biopharma includes growth drivers such as Ibrance, Eliquis, Vyndaqel, Xtandi, Xejanz and Prevnar13, along with a robust pipeline of biologics, and the R&D engine in oncology, immunology, rare diseases and vaccines.
With Mylan shareholders having approved the combination of Mylan and Upjohn, the transaction is on track to close in the second half of 2020. In return for Upjohn, Pfizer will receive $12 billion from Mylan that it can reinvest in drug development and debt reduction.
All of this considered, Argus makes a compelling case for Pfizer.
Pfizer stock traded down fractionally on Wednesday to $33.95, in a 52-week range of $27.88 to $44.11. The consensus price target is $40.04.
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