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Pfizer ‘s underperformance could be here to stay, Credit Suisse warned. Analyst Trung Huynh downgraded the pharmaceutical stock to neutral from outperform and cut his price target by $7 to $40. His new target still implies shares could rally 10.2% over the next year. “As Pfizer enters a period of uncertainty and limited pipeline catalysts, we see greater opportunity for growth among other US Major peers,” Huynh said in a Thursday note to clients. The downgrade comes just days after Pfizer said it would end development of its experimental obesity drug pill because of elevated liver enzymes. Pfizer said it still has other plans for focusing on obesity, which has been a closely followed area in the pharmaceutical development world. Shares slid 0.7% in premarket trading Thursday and are down more than 29% year to date. With lower expected sales likely for a variety of drugs, revenue is now expected to slip 1% in 2023 and by an average of 4% between 2023 and 2030. Huynh thinks the base business grow 4% between 2020 and 2025, which is lower than the company’s forecast of 6% but above the consensus estimate of 3%. Pfizer has been his worst performing call since the outperform rating at the end of November, with shares underperforming major pharmaceutical peers in the U.S. by 26%. He said concerns that have weighed on the stock include over-optimism on Covid vaccination and booster rates, “ambiguous” guidance on the drug pipeline and negative events for projects in the drug pipeline. PFE YTD mountain Pfizer, year to date And he said that performance is unlikely to change with mid-term guidance likely unachievable, continued uncertainty around Covid and the pipeline now appearing to have few events that could bring meaningful upside coming. Business development should also be less meaningful going forward, he said. Huynh said he expects questions about the decision to downgrade at a low with a valuation that appears compelling. But he said recent negative events made him less confident that management can reignite positive momentum in the short- and mid-term. With growth more important than valuation in the market, he said investing in peers may be the better option. — CNBC’s Michael Bloom contributed to this report.
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