Pfizer (PFE) fell 9% in Wednesday morning trading after the company’s weak forecast for 2024 left much to be desired in the eyes of investors and analysts alike. The stock is headed toward a 10-year low, and has now shed 50% of its value in the last year alone.
The drugmaker has been steadily losing its footing since the easing of the COVID-19 pandemic, as the demand for vaccinations dwindles. But, the company actually lowered its expectations for its Paxlovid and Comirnaty drugs – resulting in a lackluster forecast for the year ahead.
While analysts were expecting $63.17 billion in sales, Pfizer is aiming for somewhere between $58.5 billion to $61.5 billion. Even at the high end of that range, the company is set to disappoint. And if the 2023 forecast holds true, it will be a year of stagnant growth – that’s right in line with the guidance issued for this year.
The company’s profit forecast was also underwhelming. Pfizer is forecasting adjusted earnings between $2.05 to $2.25 per share. Meanwhile, analysts are looking for $3.16.
The cost-cutting plan is well underway, but has not (and will not) provide relief anytime soon. Pfizer added another $500 million to the goal, bringing the total to $4 billion. While this will save $1 billion this year and $2.5 billion next year, it’s not enough to make up for the dramatic drop in sales.
As the company struggles to adjust to a landscape post-COVID, its attention turns to products like those offered by Seagen – a leading developer of drugs designed to kill cancer cells. The company does expect $3.1 billion from this segment in the year ahead, but again – there are questions as to how Pfizer can adapt to the new normal.
All this being said, PFE investors are pulling out and cutting losses in a massive sell-off over the past few months. Should you follow suit? We’ve taken a look through the VectorVest stock forecasting software and found 3 reasons to consider moving on from PFE.
PFE Has Fair Upside Potential and Safety With Poor Timing
VectorVest simplifies your trading strategy through an intuitive proprietary stock-rating system. It saves you time and stress by giving you clear, actionable insights in 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each rating sits on the same scale of 0.00-2.00 with 1.00 being the average, making interpretation quick and easy. You’re even given a buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. As for PFE, here’s the situation:
- Fair Upside Potential: The RV rating is a comparison between a stock’s long-term price appreciation potential (forecasted three years out), AAA corporate bond rates, and risk. It offers much better insight than a simple comparison of price to value alone. PFE has a fair RV rating of 0.92, albeit below average. The stock is currently fully valued.
- Fair Safety: The RS rating speaks to a stock’s risk profile. It’s calculated through a deep analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. PFE has a fair RS rating of 0.86, but this is a ways below the average and borderline poor. If the company’s financial performance stays on this path much longer, this rating will flip.
- Poor Timing: The biggest issue for PFE investors right now is the strong downward pressure on the stock’s price, pushing it toward a 10-year low today. The poor RT rating of 0.58 reflects this performance. The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 0.79 is poor for PFE - based on all this information, the stock is rated a SELL in the VectorVest system right now. Gain more insights before you make your next move with a free stock analysis today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. PFE has fair upside potential and safety, but poor timing. The company is continuing to lose its footing and subsequently, its market share, as sales dwindle in the post-COVID landscape.
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