In a surprising turn of events, pharmaceutical giant Pfizer has projected its 2024 sales to be potentially $5 billion lower than Wall Street expectations, leading to a 9% drop in shares and marking a decade-low for the company’s stock.
The forecast indicates a significant adjustment in Pfizer’s outlook for its COVID-19 business. Despite reaching a peak of $57 billion, revenues from the company’s COVID-19 vaccines and treatments are now expected to amount to $8 billion in 2024. This figure falls dramatically short of the $13 billion anticipated by analysts and is a downgrade from Pfizer’s revised forecast of $12.5 billion for 2023.
Albert Bourla, Pfizer’s CEO, addressed the cautious approach, stating, “We want to be conservative; we want to be reliable so we won’t create uncertainty (again), which was the case, unfortunately, this year.” The emphasis on reliability aims to avoid a repetition of the uncertainty that characterized the company’s performance this year.
The market response was swift, with Pfizer’s shares, already down over 44% this year, plummeting by 8.7% in morning trading. The potential loss of over $14 billion in market capitalization looms if the downward trend continues.
Moderna and Pfizer’s German partner in the vaccine, BioNTech SE, also felt the impact, with their shares each declining by 5%.
This downward adjustment in forecasts follows Pfizer’s recent announcement of a reorganization in its cancer division, including the acquisition of Seagen, and an increase in its cost-cutting target by $500 million.
Pfizer’s 2024 adjusted profit projection of $2.05 to $2.25 per share is notably lower than analysts’ expectations of $3.16, adding to the concerns surrounding the company’s future financial performance.
The pharmaceutical giant anticipates annual revenue in the range of $58.5 billion to $61.5 billion, falling short of analysts’ average estimate of $63.17 billion. This deviation from expectations raises questions about Pfizer’s strategy in navigating the post-COVID landscape.
Despite Pfizer’s success with the COVID-19 vaccine and the antiviral pill Paxlovid, which contributed to over $100 billion in revenue in 2022, the company had to revise its initial sales forecast for 2023, cutting it by more than 40% to around $12.5 billion.
J.P. Morgan analyst Chris Schott suggests that the COVID-19 sales targets for 2024 could be viewed as a conservative estimate, potentially indicating a floor for sales in that year.
Pfizer’s management has been under pressure, evident in the recent departure of Chief Commercial Officer Angela Hwang. The company’s efforts to reorganize its commercial business, excluding oncology, into two divisions underscore the urgency to address its weak stock performance.
While the $43 billion deal for cancer drugmaker Seagen, expected to close soon, is projected to add $3.1 billion to revenue next year, analysts, including Citi’s Andrew Baum, highlight the challenges Pfizer faces due to the absence of promising high-potential pipeline assets. Several Pfizer products are expected to go off patent in the next few years, adding complexity to the company’s strategic positioning in the pharmaceutical landscape.
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