Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

UBS raises Pfizer stock target, keeps Neutral rating on Seagen optimism

EditorNatashya Angelica
Published 07/12/2024, 11:38 AM
© Reuters.
PFE
-

On Friday, UBS has updated its stance on shares of Pfizer Inc. (NYSE:PFE), increasing the pharmaceutical giant's price target to $30 from the previous $28, while maintaining a Neutral rating on the stock. The adjustment reflects a positive outlook following the company's first-quarter performance in 2024 and the addition of Seagen's portfolio to its offerings.

The stock's resilience is attributed to a combination of factors, including the prevailing macroeconomic conditions and Pfizer's appealing dividend yield. Additionally, there is a wave of optimism stemming from the integration of Seagen's portfolio and expectations of a guidance upgrade when second-quarter results are released.

Despite this, UBS's revenue projections remain 4% below the consensus, primarily due to impacts from COVID and certain growth drivers like Nurtec and Abrysvo.

On the earnings front, UBS forecasts a slight 1.5% dip below consensus at $0.43 per share, taking into account anticipated higher costs. Moreover, the market's attention is drawn to developments in the field of Obesity treatment, especially after Pfizer's recent announcement to advance danuglipron, its modified release once-daily medication, into phase 3 trials.

Still, UBS suggests that the near-term potential of this development may already be reflected in Pfizer's current stock price, and further de-risking is necessary, pending efficacy and tolerability data from the pivotal phase 3 study set to begin in 2025.

The revised price target is supported by a discounted cash flow analysis and an elevated forward price-to-earnings valuation of 11.5 times for the 2025 estimated earnings, up from the previous 11.3 times. UBS has also doubled the probability of success (PoS) for danuglipron from 20% to 40%, while maintaining its peak sales estimate at $2.1 billion. This adjustment in valuation multiples aligns with recent positive developments surrounding danuglipron, despite the unchanged sales forecast.

In other recent news, Pfizer Inc. is making significant strides in drug development and restructuring its corporate leadership. Truist Securities has maintained a Buy rating on Pfizer as the company advances with a promising once-daily formulation of danuglipron, an oral GLP-1R agonist, aimed at the competitive weight loss market. Pfizer plans to initiate dose-optimizing studies for the drug in 2024, utilizing previous Phase 2b data to expedite the clinical development process.

The company is also searching for a new Chief Scientific Officer to succeed Dr. Mikael Dolsten, who has served Pfizer for over 15 years. Dr. Dolsten will remain with the company until at least 2025, ensuring a smooth transition.

In the legal landscape, Pfizer, along with several other drugmakers, has faced a setback in a Zantac cancer case involving over 70,000 lawsuits, following a Delaware judge's denial of an appeal. However, the company recently welcomed Cyrus Taraporevala, former President and CEO of State Street (NYSE:STT) Global Advisors, to its Board of Directors. These are among the recent developments at Pfizer.

InvestingPro Insights

Pfizer Inc. (NYSE:PFE) has shown a mix of encouraging signs and challenges as reflected in the recent updates from UBS. For investors looking for additional insights, the latest data from InvestingPro provides a more nuanced picture. With a market capitalization of $164.1 billion, Pfizer stands as a significant player in the pharmaceutical industry. Its forward-looking P/E ratio, as of Q1 2024, stands at 33.79, indicating market expectations of future earnings growth.

Moreover, Pfizer's dividend yield of 5.86% is particularly appealing to income-seeking investors, especially in light of the company's track record of increasing dividends for 13 consecutive years—an InvestingPro Tip that underscores Pfizer's commitment to shareholder returns.

Investors should note that while Pfizer's revenue has seen a decline of 41.08% over the last twelve months as of Q1 2024, the company is expected to be profitable this year, according to analyst predictions—an InvestingPro Tip that may reassure those concerned with recent revenue trends. Moreover, the dividend has been maintained for an impressive 54 consecutive years, a testament to Pfizer's financial resilience and strategic planning.

For those considering an investment in Pfizer, the company's current price is 76.72% of its 52-week high, with a previous close at $28.66. The InvestingPro platform offers additional tips for Pfizer, providing a total of 10 InvestingPro Tips for a more comprehensive analysis. For a deeper dive into Pfizer's financial health and future prospects, consider using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at https://www.investing.com/pro/PFE.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.