Bank Of America Hikes Pfizer Price Target, Estimates Citing Orphan Drug Catalysts

Large-cap pharma stocks have seen a mixed performance in year to date, and among this group, Pfizer Inc. PFE is poised to benefit from some key second-half catalysts, according to an analyst at Bank of America Merrill Lynch.

The Analyst

Jason Gerberry reiterated a Buy rating on Pfizer and raised the price target from $45 to $48, attributing the revision to higher estimates, with double-digit EPS growth in the 2020-2023 timeframe and pipeline optionality.

The Thesis

Pfizer may soon transform from being a fringe player in the orphan drugs to a mainstream company, given three upcoming catalysts in the segment, Gerberry said in a note.

The analyst sees the Vyndaqel launch in cardiomyopathy as a catalyst, citing bullish feedback of KOL physicians on immediate conversion of existing U.S. patients. Long-term orphan drug launch analysis suggests scope for market expansion and in turn upside to BofA's above-consensus forecast, the analyst added. Gerberry estimates peak sales of $2 billion for the drug.

Gerberry also sees upside optionality in DMD gene therapy candidate ‘9926 for which a Phase 1 data readout is scheduled for mid-2019. If the data is positive, the analyst said, Pfizer can directly launch a Phase 3 trial by year-end 2019, same as the timeline for the lead competitor Sarepta Therapeutics Inc SRPT.

The analyst said the Phase 3 data for rivipansel in Phase 3 sickle cell anemia is likely to be the third catalyst.

Collectively, the three catalysts could lead to 3-6 percent valuation upside and possible re-rate on validation of orphan pipeline.

Price Action

Pfizer's stock traded around $42.84 per share at time of publication.

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