Pfizer Analyst Says COVID-19-Driven Rally Not Backed By Vaccine Economics

Pfizer Inc. PFE and BioNTech SE – ADR announced an agreement with the U.S. government Wednesday to supply an initial consignment of 100 million doses of the coronavirus vaccine the companies are developing in the event of future emergency use authorization or full approval for the shot. 

US Government Deal Positive For Pfizer: Pfizer's deal is positive for the nation as well as the company, BofA Securities analyst Geoff Meacham said in a note. 

The U.S. government has the optionality to acquire an additional 500 million doses the analyst said. Assuming a two-dose regimen, 600 million doses could cover over 90% of the U.S. population, he said. 

For Pfizer, the vaccine news is a positive development, Meacham said.

That said, the analyst does not see the vaccine programs as being fully derisked is looking ahead to additional data as Phase 3 trials get underway.

Pfizer's Vaccine Economics: At the $20 price point implied by the U.S. government's contract value and assuming a 50-50 gross profit split between Pfizer and BioNTech, Meacham expects the vaccine to be helpful to Pfizer's P&L.

This is especially true as company contends with portfolio risks that include the adjuvant Ibrance failure, recent pipeline programs that failed to stand apart from competition and the Eliquis patent ruling, the analyst said. 

Pfizer shares have added about $30 billion in value since their recent low in June, mainly on COVID-19 news. The valuation implies about 1.5 billion doses sold at the $20 price point, Meacham said. 

To justify the valuation, Pfizer may have to sell about 6 billion doses at a 50% margin, according to BofA — more than the sell-side firm's assumed number of patients treated worldwide through 2030 .

PFE Rating, Price Action: Meacham maintained a Neutral rating on Pfizer with a $38 price target. 

At last check, Pfizer shares were down 0.18% at $38.49. 

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