Pfizer Stock Rises as Earnings Smash Expectations. But These Challenges Remain.

Pfizer shares are down more than 10% this year, and around 20% over the past 12 months. (Sophie Park/Bloomberg)

Pfizer posted second-quarter financial results Tuesday that beat market expectations. The company also raised its full-year earnings guidance from more conservative benchmarks set earlier this year.

The stock was up 4.9% on Tuesday, but the company’s long-term problems have weighed heavily on its share price for some time.

The stock is down 58% since the start of 2022, despite the launch of a Covid-19 vaccine less than a year after the outbreak of the pandemic.

“There was an opportunity cost with Covid,” Pfizer CEO Albert Bourla acknowledged in a Tuesday interview with Barron’s. “We lost a little bit of the ball here and there in other areas.”

Now, he says, the company is back on track. “We are firing on all cylinders,” he said.

Pfizer reported second-quarter adjusted diluted earnings of 78 cents per share, well above the FactSet consensus estimate of 58 cents per share. Revenue was $14.7 billion, better than the $13.6 billion consensus estimate.

It’s good news for Pfizer. For now, though, investors have remained wary of jumping back into the stock.

Pfizer CFO David Denton told Barron’s Tuesday that trial data the company plans to present over the next year will help reassure investors about the company’s future.

“We have a lot of potential products that are in our pipeline that are going to read out,” he said. “Putting those data in the hands of investors will give them comfort that we will have a meaningful growth trajectory into 2030 and beyond.”

Shares of the drugmaker were down 11.3% this year, and 19.8% over the past 12 months, as of the close of trading on Monday. Pfizer stock trades at one of the lowest multiples of earnings expected over the next 12 months of all its big pharma peers, according to FactSet.

The problems facing Pfizer are glaring. Among the most pressing is the impending expiration of the U.S. patents protecting a long list of Pfizer’s blockbuster medicines—including the blood-thinner Eliquis next year and the cancer drugs Xtandi and Ibrance in 2027.

The political and regulatory backdrop isn’t helping. Last week, President Donald Trump posted on social media images of a letter he had sent to Bourla, along with identical letters sent to other drug CEOs, demanding big cuts in the prices of some U.S. drugs by the end of September.

The letters were a follow-up on an executive order the president signed in May, aimed at pegging the prices Americans pay for drugs to the lowest prices paid in other wealthy countries. It remains far from clear what sort of price cuts, if any, the president may eventually extract. But it isn’t making Pfizer shares look any more attractive.

Speaking to Barron’s on Tuesday, Bourla said the company is “in the middle of these discussions” with the administration.

The revenue beat announced Tuesday wasn’t attributable to any single product. Sales of a long list of Pfizer medicines came in ahead of consensus, including its Covid-19 vaccine Comirnaty, which had $381 million in sales in the quarter, up from $195 million in the same quarter last year, and better than the $195 million consensus estimate.

Pfizer maintained its full-year revenue guidance, but said it now expects adjusted diluted earnings of between $2.90 and $3.10 this year, up from its prior estimate of between $2.80 to $3.

In comments distributed ahead of the company’s Tuesday morning investor call, Pfizer CFO Denton said he would have raised the earnings guidance by 30 cents per share at the midpoint, rather than 10 cents, but that the new outlook accounts for a 20 cent-per-share charge associated with a licensing deal the company announced in May with the Chinese biopharma 3SBio .

The company said it was able to raise the full-year earnings guidance due in part to cost savings. Denton said Pfizer’s cost-cutting efforts will save $4.5 billion by the end of this year, and $7.7 billion by the end of 2027.

The company has been working to get analysts excited about SSGJ-707, a cancer medicine the company licensed from a Chinese biopharma in May for an eye-popping $1.3 billion up front. The drug is a new type of experimental treatment called a PD-1/VEGF bispecific antibody, one of a number of similar PD-1/VEGF bispecific antibodies that U.S. companies have licensed from Chinese drugmakers in recent months.

Pfizer held an analyst event in late July highlighting SSGJ-707. Analyst responses were lukewarm. “Big opportunity, but key questions remain,” TD Cowen analyst Steve Scala wrote at the time.

On Tuesday, Pfizer highlighted a handful of pipeline programs, including SSGJ-707, along with Sigvotatug Vedotin, an experimental cancer treatment, and an experimental vaccine for C. difficile now in Phase 2 trial.

It isn’t yet clear what will lift the company’s prospects, and it all adds up to a difficult moment for Pfizer.

“While Pfizer deserves some credit for the near-term execution, we suspect the EPS revisions will be viewed as more of the same…and sort of beside the point given the long-term growth challenges, for which we’d argue Pfizer still doesn’t have adequate answers,” Cantor analyst Carter Gould wrote in a Tuesday morning note.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com