Step by step, life is returning to pre-Covid-19 patterns. The resumption of travel, the economic reopening and return to the workplace are all signs normalcy is resuming.
However, for the businesses rolling out Covid-19 vaccines, the “opportunity” might be longer-lasting. At least this is what RBC’s Daniel Busby senses when assessing Pfizer’s (PFE) Covid-19 vaccine model. Recent supply contracts, says Busby, indicate that Covid-19 vaccines could be a “durable” multi-year revenue opportunity.
One notable example is the recent agreement with the EU, for which Pfizer (with partner BioNTech) has been contracted to provide up to 1.8 billion additional doses until the end of 2023. This includes a potential vaccine adapted to fend off variants. The US, Canada, and Israel have also signed on the dotted line to receive more vaccines post-2021.
Such behavior suggests countries are “taking the potential need for booster shots seriously, which should translate into a more durable vaccine revenue stream for PFE, at least for the next few years.”
With this in mind, Busby raised his Comirnaty (the vaccine’s brand name) revenue forecasts from 2021 through 2023 to $34 billion, $19 billion, and $16 billion from the prior $26 billion, $15 billion, and $11 billion, respectively.
Further down the line, there are a number of notable and “less certain” factors such as the “duration of vaccine protection, evolution of the virus (i.e., new variants), and competitive dynamics,” which will play their part in establishing the “longer-term market opportunity.”
However, while the analyst admits “near-term visibility has improved with each new contract,” there are still questions regarding the “longer-term revenue durability.”
“We do not expect that debate to be settled anytime soon,” Busby summed up, “But booster data expected this summer could provide important clues.”
As such, Busby reiterated a Sector Perform (i.e. Hold) rating for PFE shares, although due to the “higher vaccine contribution,” the price target is nudged from $43 to $44. The new target implies shares will gain ~13% in the coming months. (To watch Busby’s track record, click here)
The Street’s average price target is almost identical to Busby’s while most back his overall assessment. The stock’s Hold consensus rating is based on 9 Holds vs. 2 Buys and 1 Sell. (See Pfizer stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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