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On Tuesday, Bernstein analysts maintained their Market Perform rating and $30.00 price target for Pfizer Inc. (NYSE:PFE) stock. The pharmaceutical giant, currently trading at $23 with a market capitalization of $130.7 billion, has recently licensed the SSGJ-707 product for $6 billion, a move that has raised questions about the future of its collaboration with Summit Therapeutics (NASDAQ:SMMT). According to InvestingPro analysis, Pfizer appears undervalued at current levels, with a robust dividend yield of 7.48% and a moderate P/E ratio of 16.5x.
Pfizer’s acquisition of SSGJ-707, a PD1/VEGF bispecific asset, comes at a time when the company is already involved in a clinical collaboration with SMMT to test Ivo in conjunction with Pfizer’s ADCs. Bernstein analysts suggest several possible reasons for Pfizer’s decision to secure SSGJ-707: potential clinical or commercial disagreements with SMMT, concerns about the SMMT asset, or a competitive bid for the bispecific. With annual revenue of $62.5 billion and a strong financial health score of GOOD from InvestingPro, Pfizer maintains significant financial flexibility for strategic acquisitions.
The deal underscores the growing importance and competition in the PD1/VEGF bispecific market. Other notable transactions include Merck (NSE:PROR)’s (MRK) acquisition of LM-299 from LaNova for $3.3 billion and BioNTech (NASDAQ:BNTX)’s purchase of BNT327 from Bioethus for approximately $1.8 billion. Bernstein also noted the significance of Pfizer’s intention to manufacture this new asset in the United States, reflecting current policy uncertainties around tariffs and domestic drug pricing.
In response to inquiries about the impact of the SSGJ-707 deal on Pfizer’s existing agreement with SMMT, Pfizer stated that they do not foresee any changes to their clinical collaboration as a result of this transaction. This statement suggests that, for now, Pfizer’s relationship with SMMT will continue as planned despite the new licensing agreement.
In other recent news, Pfizer Inc. has entered into a significant licensing agreement with 3SBio Inc. for the development and commercialization of the cancer therapy SSGJ-707, with an upfront payment of $1.25 billion and potential milestone payments nearing $5 billion. This deal aims to expand Pfizer’s bispecific antibody and immuno-oncology offerings. However, Cantor Fitzgerald has maintained a Neutral rating for Pfizer, expressing concerns over the substantial initial investment and potential financial constraints. The analysts highlighted that Pfizer’s margin for error has narrowed due to this strategic move.
Additionally, Moody’s has assigned an A2 rating with a stable outlook to Pfizer Netherlands International Finance B.V., a subsidiary of Pfizer, reflecting its strong market position and high margins. Meanwhile, the Department of Health and Human Services is expected to change its Covid-19 vaccine recommendations, which could impact Pfizer’s vaccine sales.
Lastly, CLSA has raised the price target for 3SBio to HK$19.60, attributing the increase to its partnership with Pfizer, which is anticipated to enhance 3SBio’s market presence and future revenue streams. This collaboration is seen as a positive development for 3SBio, bolstering its financial performance outlook.
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