Key Points
He continues to consider Pfizer a sell.
The pundit's main concern is the company's weaknesses in three key products.
On the second trading day of the week, Pfizer(NYSE: PFE) was a laggard on the stock exchange. An analyst reiterated his bearish view of the stock, and more than a few investors were obviously convinced by the argument. That pushed the shares down by more than 2% that market session.
Continued underperformance expected
The pundit behind the new Pfizer note was RBC Capital's Trung Huynh. Before market open, he published an update centered on his underperform (sell, in other words) recommendation and $25 per share price target.
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Huynh's latest analysis of the pharmaceutical giant comes less than a month before the company is scheduled to publish its first-quarter earnings. According to reports, the analyst expects Pfizer's revenue for the period to fall 4% year over year.
This will be due mainly to dynamics in three major products, in his opinion. These are the Covid drug Paxlovid, Vyndamax, a treatment for the rare, progressive heart disorder ATTR-CM, and the Pneumococcus vaccine Prevnar. Huynh wrote that competitive pressures have pushed Vyndamax's net realized prices down for six consecutive quarters.
A bargain at this price
Pfizer is an out-of-favor pharmaceutical stock these days, as many investors remember the company's glory days earlier this decade as the co-developer of the widely consumed Covid vaccine Comirnaty.
It's been retrenching since then through both proprietary drug development and the acquisition of promising pharma assets. However, it hasn't yet scored a knockout win with a major new product and is facing patent cliffs with some top drugs in the coming years.
To me, this makes it something of a sleeping giant. That pipeline is very wide and varied, and, as it has in the past, I'm certain the company will bring a popular medicine to market before long. Meanwhile, the stock looks unsustainably cheap and it pays a very generous dividend. I'd disagree with Huynh's downbeat assessment.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer. The Motley Fool has a disclosure policy.
