Pfizer Stock Up 7% in April – Time to Buy PFE Stock?

The price of Pfizer stock is up nearly 7% so far this month following the approval of a fourth dose of COVID vaccines by the FDA for certain age groups and the acquisition of a biopharmaceutical company.

On 29 March, the Food and Drug Administration (FDA) approved the administration of a second booster for people aged 50 or older and for patients over 12 years old who are considered immunocompromised.

A fourth dose of vaccines would boost the firm’s revenues in the short term and the market reacted positively to the development as indicated by this month’s sharp uptick in the stock price.

Meanwhile, in a press release published yesterday, Pfizer provided more details about the acquisition of ReViral, a company that specializes in the development of antiviral treatments and that is currently focused on producing drugs to treat the respiratory syncytial virus (RSV).

The deal values ReViral at $525 million, with a portion of the total amount being paid upfront and the remaining installments being disbursed after reaching certain milestones. Pfizer believes that it can generate up to $1.5 billion in revenue from the programs that are being promoted by this new addition.

According to the press release, ReViral’s most promising drug at the moment is sisunatovir, an orally-administered treatment that seeks to block the fusion of the RSV virus with the host cell. The company estimates that around 64 million are infected every year with this disease.

“The proposed acquisition of ReViral’s pipeline of therapeutic candidates is complementary to our efforts to advance the first vaccine candidate to help protect against this harmful disease”, stated Annaliesa Anderson, Ph.D., a Senior Vice President and Chief Scientific Officer at one of Pfizer’s unit.

Finally, on 4 April, a spokesman for Pfizer (PFE) told Reuters that the company managed to manufacture a total of 6 million courses of its PAXLOVID™ COVID-19 antiviral drug. This means that Pfizer achieved the target set forth by its Chief Executive Officer, Albert Bourla, earlier this year.

According to Bourla, a total of 120 million doses of the drug will be produced in 2022 with the United States already placing a firm order to purchase a total of 20 million of those courses.

What could be expected from this healthcare stock following these interesting developments? In this article, I will be assessing the price action and fundamentals of Pfizer stock to outline plausible scenarios for the future.

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Pfizer Stock – Technical Analysis

Pfizer stock remains in negative territory for the year despite its advance in April with accumulated yearly losses currently standing at 6.6%. Meanwhile, the price of PFE stock is standing 14% above its 200-day simple moving average and 10.6% below its 52-week high.

The latest uptick has pushed the price to an area of resistance at $55 per share. This is a critical threshold to overcome if bulls want to push PFE higher in the following weeks.

Momentum indicators remain in positive territory as the Relative Strength Index (RSI) is standing at 65 while the MACD has just moved above the signal line again.

Moving forward, a decisive break above the $55 level could lead to another push to all-time highs. Some of the catalysts that could push the stock to those levels include reaching the remaining production targets for Paxlovid in subsequent periods and the approval of a fourth booster for other age groups.

Pfizer Stock – Fundamental Analysis

Using data from the CDC, one can make a rough estimate of how much money this fourth booster shot could produce for Pfizer in the coming quarters. Thus far, around 33 million individuals older than 65 years have received a first booster.

If we assume that all of these people will agree to receive a second booster, that would result in a total of around $643 million in additional revenue for Pfizer and Moderna (MRNA) – the two companies that were granted approval for administering this additional booster shot.

Meanwhile, if we assume that a similar percentage of people between 50 and 65 years old have also received their first booster already – around 67% – that would result in approximately 21 million more doses for a total of $409.5 million in extra revenues assuming a price per course of $19.50.

Pfizer has accounted for around 60% of all the doses administered which means that the company could produce another $600 million out of this fourth shot in the United States alone.

In addition, if other countries follow through and approve a second booster, that figure could increase to over a billion rather quickly.

An extra billion would boost Pfizer’s expected revenues for 2022 by only 1%. However, it may prolong the time during which the company will benefit from en-masse COVID vaccinations beyond the market’s initial expectations.

As a result of this latest uptick, Pfizer is now trading at 7.6 times its forecasted earnings for the next twelve months while offering an appealing dividend yield of 2.9%.

Moving forward, there are still many ways in which Pfizer can manage to keep boosting its financial performance including strong PAXLOVID™ sales, the approval of a fourth COVID vaccine shot in other latitudes, and the development of effective treatments for RSV such as those being pushed by ReViral.

From a fundamental standpoint, the valuation remains relatively conservative and prospects continue to be positive. Additionally, the company could decide to further boost its dividend in the future if free cash flows remain elevated for longer than expected while at the same time buying billions in stock through the use of these extensive reserves.

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