Pfizer Quietly Gaining Momentum

Investment Thesis - Pfizer's stock delivered a total return of 6.5% since February, underperforming the broader market's 7.3% return [1] - The company secured FDA approval for its KP.2-adapted COVID-19 vaccine, positioning it well for the 2024-2025 season [1] - Core products like Eliquis, Vyndaqel, and newer oncology therapies, along with Seagen acquisitions, are driving growth [1] - Pfizer is expanding into obesity treatments and oncology through key R&D investments, diversifying its pipeline [1] - Technical indicators suggest potential stock strength, with RSI trending upward and early signs of accumulation in VPT [1][3] Technical Analysis - Pfizer's current stock price of $28.5 aligns with the pessimistic 2024 price target based on the 0.382 Fibonacci level [2] - The average price target of $31 (1.0 Fibonacci level) suggests modest upside, while the optimistic target of $33 (1.618 Fibonacci level) indicates potential for stronger gains [2][3] - RSI at 51.84 indicates neutral market sentiment, but the upward trend suggests potential stock strength [3] - VPT shows signs of upward reversal, indicating possible accumulation [3] - Historical seasonality data suggests stronger performance in October (62% chance of positive returns) and November (70% chance) [4] COVID-19 Vaccine Market - Pfizer's KP.2-adapted COVID-19 vaccine, developed with BioNTech, is FDA-approved for the 2024-2025 season [5][6] - The COVID-19 vaccine market is projected to reach $25.6 billion by 2024, with the US contributing $4.39 billion [7] - Pfizer expects the KP.2 vaccine to capture substantial market share, supported by FDA recommendations [6] - The market faces a compound annual growth rate of -17.64% from 2024 to 2029 [7] Financial Performance - Pfizer's Q2 2024 revenue reached $13.3 billion, marking 3% annual operational growth [8] - Excluding COVID-related products, operational revenue growth was 14% [8] - Adjusted gross margin improved to 79% from 76% last year, driven by a favorable sales mix of non-COVID products [8] - Core products like Eliquis, Vyndaqel, and Xtandi drove revenue growth, with Eliquis capturing a growing share of the oral anticoagulant market [9] - Nurtec experienced a 44% annual increase in global operational revenue [9] Oncology and R&D - Pfizer's oncology segment, bolstered by the Seagen acquisition, is seeing growth with products like Padcev, Xtandi, Lorbrena, and Braftovi-Mektovi [9] - Full FDA approval for Tivdak and positive CHMP opinions for Braftovi-Mektovi and Padcev in Europe are critical milestones [9] - R&D expenses increased by 2% operationally in Q2 2024, with a focus on obesity treatments like danuglipron, an oral GLP-1 receptor agonist [9] - Positive results from the Phase 3 CROWN study of Lorbrena in ALK-positive metastatic non-small cell lung cancer showed 60% of patients living beyond five years without disease progression [9] Manufacturing and Cost Management - Pfizer's Manufacturing Optimization Program aims to deliver $1.5 billion in savings by 2027, with savings expected to start in 2025 [9] - The program focuses on improving operational efficiency and realigning the cost base to hit pre-pandemic operating margins [9] - Fiscal year-end revisions show 20 EPS upward revisions and 16 revenue upward revisions, with only 3 revenue downward revisions [10] Revenue Risks and Market Competition - Pfizer remains partially dependent on COVID-19 products, with Q2 2024 COVID-related sales forecast at $8.5 billion [11] - The COVID-19 vaccine market is increasingly competitive, with companies like Moderna and new entrants developing alternatives [11] - Evolving virus strains and competitor advancements create challenges for sustaining market share [12] - Revenue estimates for December 2024 are $60.99 billion, with annual growth of 4.27%, and a P/S ratio of 2.70 [12] - By December 2025, revenue may reach $63.11 billion, with a forward P/S ratio of 2.60 [12] Long-Term Growth Narrative - Despite near-term challenges from fluctuating COVID-19 demand and market competition, Pfizer's strong core portfolio and strategic pipeline investments present a solid growth narrative in the long term [14]