Nucor earnings beat by $0.08, revenue fell short of estimates
On Tuesday, Goldman Sachs analyst Asad Haider revised the investment firm's stance on Pfizer (NYSE:PFE) stock, downgrading it from Buy to Neutral and reducing the price target to $25 from the previous $32. The shift in rating reflects a cautious outlook on the pharmaceutical giant's near-term prospects. The stock, currently trading at $22.63, sits near its 52-week low of $21.75, though InvestingPro analysis suggests the stock is currently undervalued based on its proprietary Fair Value model.
Pfizer, known for its significant role in developing a COVID-19 vaccine, has faced downward revisions in revenue expectations related to the pandemic over the past two years. Goldman Sachs anticipates that Pfizer shares will likely remain rangebound due to pressures on the company's base business. The firm highlighted the need for more clarity on Pfizer's mergers and acquisitions (M&A) strategy and the development of its drug pipeline before a positive re-rating of the stock could be justified.
Despite acknowledging Pfizer's strategic realignment efforts, Goldman Sachs believes that the benefits of these initiatives will take time to materialize in the stock price. Pfizer has been actively deploying its COVID-19-related cash flow towards value-generating M&A, which has laid the foundation for a robust oncology franchise. Additionally, the company has made significant strides in cost management, streamlining operations to enhance productivity, and has brought in new leadership within its research and development (R&D) division to prioritize its pipeline.
The analyst's commentary suggests a long-term journey ahead for Pfizer, with the current strategic changes needing additional time before they can be fully appreciated by the market. The revised price target of $25 reflects this cautious view on how soon Pfizer's efforts will translate into tangible stock performance gains.
In other recent news, Pfizer has been advised by Institutional Shareholder Services (ISS) to reject a proposal regarding executive compensation due to changes in long-term awards for CEO Albert Bourla and other executives. These changes have reportedly increased the CEO's compensation by about $1 million, raising concerns over the company's pay-for-performance philosophy. Additionally, Pfizer is among several companies identified by Bernstein as facing significant tariff risks due to substantial U.S. revenue and imports, which could lead to increased costs. This comes as drugmakers, including Pfizer, are expediting shipments to the U.S. in anticipation of potential new tariffs.
Moreover, Berenberg has maintained a Hold rating on Pfizer with a price target of $28, following a review of the company's 2024 annual report. The report highlighted Pfizer's acquisition of Seagen in 2023 to bolster long-term sales growth, despite marking down the value of three Seagen pipeline assets in 2024. Pfizer's strategy is currently focused on navigating a significant patent expiry phase, which poses a risk to its revenue stream. Meanwhile, the recent resignation of Dr. Peter Marks from the FDA has introduced uncertainty for vaccine developers like Pfizer, as he played a key role in the regulatory process for vaccines.
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