Investing

6 Reasons to Avoid Pfizer (PFE) Stock Without Hesitation

Lee Jackson

Published: December 14, 2023 11:48 am

Pfizer Inc. (NYSE: PFE) was printing money during the Covid pandemic. Still, those days are way in the rearview mirror as investors not only see shrinking sales but also see the potential for a social and consumer backlash not unlike what some other U.S. companies have faced.

Pfizer stock traded as high as $59 in December of 2021; the shares closed trading recently at $29.69, a stunning 50% plunge from the high. In addition, the company announced they were cutting an astonishing $9 billion from their revenue estimates as sales of the COVID-19 vaccine and the oral drug Paxlovid have plunged.

Wall Street remains very negative

Of the 17 companies on Wall Street covering Pfizer, only 6 have Buy ratings, while 11 have Hold or Neutral ratings. While we couldn’t find any Sell ratings, the lack of analyst support is unsurprising after the stock’s massive tumble.

Covidbooster shots are no silver lining

Despite health officials urging anyone six months and older to get a booster shot, a very skeptical public has been avoiding it like the plague, at least so far. According to a new survey, only 1 in 4 Americans want another shot.

Paxlovid sales have disappeared

Sales of the pill, which is also used to combat Covid, dropped an incredible 97% to $202 million. This comes after Paxlovid generated $19 billion in sales in 2022. The five-day course of Paxlovid costs a whopping $1400.

The third quarter results were horrible again

As noted, the drop in consumers getting COVID-19 booster shots was a significant drag on third-quarter results, when the company posted a staggering 41% operational decline in sales and losses that exceeded expectations. While sales for the company’s RSV drug beat expectations, they were nowhere near enough to match the COVID-19 booster decline.

2023 results will also be horrible

For calendar 2023, Pfizer expects to report earnings per share between $1.45 and $1.65 on revenues expected to come between $58 billion and $61 billion. Hitting the midpoint for earnings would be a staggering 76% decline over 2022 and an incredible 41% drop in sales.

Dismal Future Likely

As we noted, while Wall Street hasn’t abandoned Pfizer, the strong dividend and big sell-off keep most from going to a Sell rating; the future is not that bright. While the company has many other products, none will be the massive cash cow the COVID-19 vaccine was. Most sell-side analysts and portfolio managers view the shares as a value trap that could tread water for years.