- Shares sink to 10-year low
- Cost-cutting plan increased to $4 billion
- 2024 earnings expected to be 30% below consensus
A tough year for US pharmaceutical firm Pfizer (PFE:NYSE) just got even worse on Wednesday after the Covid winner reset expectations again.
This disappointed investors and sent the shares 7% lower overnight to a new 10-year low.
The news also dragged down the share price of Pfizer’s German Covid vaccine partner BioNTech (BNTX:NASDAQ).
Pfizer said revenue from its Covid-19 vaccine Comirnaty and antiviral pill Paxlovid is expected to be $8 billion in 2024, some $5 billion shy of consensus estimates and below the firm’s own lowered guidance of $12.5 billion.
‘We want to be reliable, so we won't create uncertainty (again), which was the case, unfortunately, this year,’ explained chief executive Albert Bourla on an investor call.
The company’s Covid drugs generated over $100 billion of revenue in 2022 and the company originally expected 2023 revenue to come in at $21.5 billion.
LOWER PROFIT GUIDANCE / JOB CUTS
Pfizer now expects total 2024 revenue to be in the $58.5 billion to $61.5 billion range and adjusted earnings per share to be between $2.05 and $2.25, around a third below consensus forecasts.
In addition, the firm increased its cost-cutting plan by $500 million bringing total anticipated cost savings to $4 billion by the end of 2024.
Financial costs are expected to climb following the $43 billion acquisition of cancer treatment developer Seagen (SGEN:NASDAQ).
Chief commercial officer Angela Hwang is stepping down amid a reorganisation of the commercial business outside of cancer into two divisions, one focused on the US and the other on the rest of the world.
EXPERT VIEW
Danni Hewson, head of financial analysis at AJ Bell, said: ‘The success of its Covid vaccine has been a mixed blessing for US drug maker Pfizer, which has struggled to forge a path in a post-pandemic world.
‘Its bosses failed to adequately manage investor expectations about how much it would rake in from Covid sales once the world re-opened fully and today’s forecast for 2024 might have been seeking to set the bar achievably low.
‘It needs to reorganize, rehabilitate, and rejuvenate, and it is making big structural changes to achieve this. But investors want it to recreate the success it tasted in 2020 and that’s a big ask in today’s changed landscape.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (James Crux) own shares in AJ Bell.
