Pfizer (PFE) saw a decline in its shares on Monday following the company’s lowered guidance. The stock slipped by 2.5% to $31.30. Pfizer recently updated its guidance and provided a statement regarding the return of treatments for Paxlovid, a drug used to treat Covid-19 symptoms. The company now expects its revenue for the year to be between $58 billion and $61 billion, which is lower than the previous estimate of $67 billion to $70 billion.
Impact of the Pandemic
Pfizer had a successful period during the pandemic when it developed one of the first vaccines against the virus. This led to record revenue for two years and boosted the company’s shares up until the beginning of 2022. However, with declining vaccination rates, Pfizer’s shares have also been on the decline. The stock has already lost 37% this year.
Third-Quarter Earnings and Charges
Pfizer is scheduled to report its third-quarter earnings on October 31. In preparation for this, the company announced that it will take a noncash charge of $5.5 billion in the third quarter. This charge will account for writing off $4.6 billion of Paxlovid and $900 million of other inventory.
Impact on BioNTech
BioNTech (BTNX), Pfizer’s partner in developing Covid treatments, also experienced a drop in premarket trading. The company confirmed that it will take a charge for writing off vaccine inventory.
Following Friday’s announcement, analysts at BMO Capital Markets, led by Evan David Seigerman, reduced the price target for Pfizer from $44 to $33. Seigerman highlighted concerns about the company’s management forecast and evolving Covid-related business but maintained his Outperform rating on the stock until further clarification is provided.
Analysts at Citi maintained a Neutral rating and stated that the guidance revision could be seen as an important clearing event for the stock.
Wells Fargo’s Perspective
Wells Fargo analysts, led by Mohit Bansal, echoed similar sentiments, noting that the magnitude of weaker demand may surprise investors. Nevertheless, they viewed this step as a positive move toward recovery.