In 2020 the COVID pandemic started which drove Pfizer's revenue sky high after it developed its vaccine and Paxlovid. The main driver of Pfizer's revenue was products related to COVID. Their revenue segments related to COVID are Comirnaty, and Paxlovid, both these segments make up 60% percent of Pfizer’s Revenue. With COVID cases declining this has caused Pfizer’s largest revenue segments to decline. 

Pfizer’s Performance in the Market 

Over the past year Pfizer has performed poorly in the market. The stock is down 35% and hit a 52-week low of 29.70 dollars. The main driving force of this downside is Pfizer’s poor quarterly results. This recent earnings announcement showed the company really struggled in the most recent quarter. Their gross margin, which is how much it costs to make a product, was 30%. This is exceptionally terrible when comparing it to Q3 2022 which Pfizer’s gross margin was 73.2%. The graph below visualizes the significant drop in gross margin in Q3 2023. 

Pfizer Compared to Moderna  

The three prevalent companies that produced COVID vaccines were Pfizer, Moderna, and Johnson & Johnson. These three companies distributed most of the vaccines throughout the pandemic. Pfizer and Moderna are the most comparable companies because they have large amounts of revenue from the COVID Vaccine. Neither of these companies don’t really have a revenue identity outside of COVID. The effects of COVID becoming less prevalent have been more pronounced for Moderna. This is reflected in their Earnings Per Share (EPS). Pfizer currently has a lower P/E ratio and higher EPS than Moderna which signals that Pfizer is undervalued.  

Pfizer’s Future 

Pfizer is approaching the bottom of its fall. Pfizer has potential to rebound from this low and drive up its share price. Pfizer is expected to return to a similar level of revenue within 5 years. Pfizer is currently spending a consistent amount of money on R&D developing new drugs, so they are bound to find a new winner. Additionally, their Vyndaqel family of drugs is expected to experience significant revenue growth. Vyndaqel is a drug that significantly reduces the effects of the weakening of the heart.  Vyndaqel is a very inelastic drug and demand for it will only increase because of its ability to reduce mortality. Further Pfizer has a drug family called Prevnar which boosts your immune system antibodies to help protect you from pneumonia. Children and the elderly are the most at-risk populations and pneumonia is the leading cause of hospitalization. For these reasons Prevnar is expected to be in high demand. Vyndaqel and Prevnar are drugs that can give Pfizer back its revenue identity and drive its share price up. 

Final Thoughts 

Pfizer is approaching its bottom, with a price target around 35 dollars a share. Pfizer has a very attractive valuation compared to its competitor Moderna with a low P/E ratio and constant EPS. Further, Pfizer is expected to return to normal ratios by improving its gross margin and revenue. Pfizer has a long road ahead of them but is expected to recover over the next 5 years.