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On Tuesday, Bernstein analysts maintained a neutral stance on Pfizer Inc. (NYSE:PFE) shares, reiterating a Market Perform rating and a price target of $30.00. The pharmaceutical giant, with a market capitalization of $128 billion and a notable dividend yield of 7.8%, appears undervalued according to InvestingPro analysis. The decision by Pfizer to halt the development of danuglipron, their leading oral GLP-1 receptor agonist for chronic weight management, has been acknowledged by the analysts. The discontinuation of the drug was somewhat anticipated due to its tumultuous development path, and the modest peak sales expectation of approximately $1.3 billion, which represents a mere 1% of the total addressable market. Despite this setback, InvestingPro data shows Pfizer maintains strong fundamentals with $63.6 billion in revenue and a healthy P/E ratio of 15.9.
Pfizer’s move to cease work on danuglipron is seen as a setback in its efforts to establish a significant presence in the obesity treatment market. The company is now perceived as trailing behind Roche and other competitors. In response, Pfizer is expected to actively pursue mergers and acquisitions or licensing deals to bolster its product pipeline. With a strong financial health score of GOOD from InvestingPro and a 55-year track record of maintaining dividends, the company appears well-positioned to pursue strategic opportunities.
Conversely, the development is viewed positively for Eli Lilly and Company (NYSE:LLY), as Pfizer’s withdrawal may give them an extended lead time, possibly up to three years, as the foremost oral incretin therapy provider. This advantage is expected to enhance Eli Lilly’s position, given their existing strength in the injectable market. The analysts do not perceive any increased risk to Eli Lilly’s Orforglripon, despite Pfizer’s comments on the liver profile associated with danuglipron.
In other recent news, Pfizer announced it would halt the development of its oral GLP-1 diabetes treatment, danuglipron, due to concerns over potential drug-induced liver injury. Despite this setback, Pfizer plans to continue exploring other oral drug candidates, including an ongoing Phase 2 study of an oral GIPR antagonist for obesity. Analysts have responded to these developments with varied adjustments to their ratings and price targets for Pfizer. Leerink Partners maintained a Market Perform rating with a $28 target, while Morgan Stanley (NYSE:MS) kept an Equalweight rating with a $31 target. However, UBS lowered its price target to $24, maintaining a Neutral rating, citing potential impacts from the Inflation Reduction Act and overestimated sales forecasts for key products. Goldman Sachs downgraded Pfizer from Buy to Neutral, reducing the price target to $25, reflecting a cautious outlook on Pfizer’s near-term prospects. The firm noted that Pfizer’s strategic efforts, including mergers and acquisitions and pipeline developments, may take time to positively impact the stock. Additionally, the pharmaceutical industry, including Pfizer, faces potential challenges from proposed tariffs announced by President Trump, which could affect global supply chains and profitability.
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