Pfizer Slumps 4% after reporting Mixed Earnings

Pfizer was the first company to report that they had developed a covid-19 vaccine in partnership with German company BioNTech. Investors have been placing big bets on biotech companies since the beginning of the pandemic. However, keen focus has shifted to biotech earnings to weigh whether the companies have actually made significant revenue and profits.

Key Takeaways
• Pfizer reports upbeat revenues but misses on earnings per share.
• Pfizer raises sales revenue targets for 2021 based on vaccine demand.
• 100 million more doses to be supplied to the US in a potential deal with Biden’s administration.

On 2nd February 2021, Pfizer reported its fourth quarter earnings. The stock slumped 4% in its first hour of trading. The news was mixed since the revenues beat analysts’ expectations while the earnings per share (EPS) fell short of Wallstreet’s expectations. The company reported EPS of $0.42 slightly missing investor expectations of $0.50. The revenues in the 4th quarter were $11.7B compared to analyst expectations of $11.5B.
One key factor that surprised the markets is that the company raised vaccine sales targets for 2021. The company is now looking to make $15B worth of vaccine sales revenue compared to a previous expectation of $12.7B.

The revenues reported were largely contributed by the sale of Vyndaql/Vyndamax, a drug that treats a rare heart condition, which saw a rise of 96% compared to the same period last year. Sales of Prevnar 13/Prevenar 13, a pneumococcal vaccine also rose by 10%. The company sold $154M worth of covid-19 vaccine in 2020.

Pfizer is close to signing a deal to supply the US with an additional 100 million doses in partnership with German firm BioNTech. The company expects to make 6% annual revenue growth in the next five years and 10% risk-adjusted annual earnings per share growth in five years.

There exists downside risks from Xeljanz, an autoimmune disease drug that was approved by the FDA in 2012 to treat rheumatoid arthritis. Pfizer was asked to do a safety study on the drug and the preliminary results are not very promising.
Bottomline, Pfizer remains the top dividend stock in the health sector. Its revolutionary work of developing a vaccine in record time proves it has the necessary technology to develop future drugs and vaccines that may add more revenue to the company. Investors will be eyeing first quarter results in 2021 as well as the full report on Xeljanz safety study.
The stock was trending on a bullish momentum along the lower trendline on the 4 hour and daily charts. After the earnings report was announced, the price broke below the trendline indicating that a bearish momentum could continue. It may also indicate that the stock is undergoing correction thereby giving investors an opportunity to enter at lower prices. The spot price as at the moment of writing this was $34.87. If the stock finds support, bulls could target the $43 level.

Rufas Kamau
Research & Markets Analyst
Scope Markets