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On Wednesday, Jefferies, a global investment banking firm, increased its price target on Pfizer Inc. (NYSE:PFE) stock to $33.00, up from the previous $33.00, while reaffirming its Buy rating. With the stock currently trading at $23.52, InvestingPro analysis suggests Pfizer is undervalued, supporting Jefferies’ optimistic outlook. The adjustment follows Pfizer’s announcement of an exclusive global licensing agreement with 3SBio for the compound SSGJ-707, a PD-1/VEGF inhibitor.
The analyst at Jefferies expressed a positive view on the deal for Pfizer, highlighting three key reasons. For the pharmaceutical giant, which maintains a robust 74.42% gross profit margin and generates $62.46 billion in revenue, this strategic move could further strengthen its market position. Firstly, the acquisition of their own PD1xVEGF asset aligns with Pfizer’s strategic interests. Secondly, the Phase 2 data for ’707 is promising and competitive with similar drugs from companies like Summit Therapeutics (NASDAQ:SMMT) and BioNTech (NASDAQ:BNTX). Investors are advised to watch for additional data on Non-Small Cell Lung Cancer (NSCLC) expected to be released at the upcoming American Society of Clinical Oncology (ASCO) meeting.
Furthermore, the analyst foresees potential synergies between ’707 and Pfizer’s Monomethyl auristatin E (MMAE) Antibody-Drug Conjugates (ADCs), such as Padcev, DV, and SV. These combinations could enhance Pfizer’s oncology portfolio and offer new treatment options for patients.
In terms of financial projections, Jefferies has modeled a $1.08 billion risk-adjusted peak sales (PS) for ’707, assuming a probability of success (POS) in the range of 20-25%. This estimate underpins the increased price target and optimistic outlook on the stock.
Pfizer’s collaboration with 3SBio represents a strategic move to strengthen its position in the oncology market, especially in the area of cancer immunotherapy. With clinical data to support the efficacy of ’707 and the potential for enhanced therapeutic solutions through combination with existing ADCs, Pfizer continues to focus on expanding its portfolio and driving growth in a competitive pharmaceutical landscape. InvestingPro data shows the company maintains a strong financial health score and offers a notable 7.31% dividend yield, making it an attractive consideration for value investors. For deeper insights into Pfizer’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Pfizer Inc. has entered into a significant agreement with 3SBio Inc. for the licensing of the cancer therapy SSGJ-707, involving an upfront payment of $1.25 billion and potential milestone payments up to $4.8 billion. This agreement excludes China, though Pfizer retains an option for commercialization rights within the country. The deal highlights Pfizer’s strategic expansion in the bispecific antibody and immuno-oncology sectors, with plans to manufacture the drug in the United States. Analysts at Bernstein and Cantor Fitzgerald have maintained a Market Perform and Neutral rating on Pfizer’s stock, respectively, with concerns about financial flexibility and competitive positioning.
Bernstein set a price target of $30, while Cantor Fitzgerald set it at $24, reflecting cautious optimism amid the substantial investment. The acquisition of SSGJ-707 underscores the competitive landscape in the PD1/VEGF bispecific market, with other notable transactions by companies like Merck (NSE:PROR) and BioNTech. Meanwhile, 3SBio’s collaboration with Pfizer has led CLSA to raise its stock target for 3SBio, indicating a positive outlook for its financial performance. These developments come as the FDA announced new clinical trial requirements for COVID-19 boosters for healthy individuals under 65, affecting vaccine manufacturers like Pfizer. The FDA’s decision aims to ensure that annual shots for younger Americans are evidence-based, amidst ongoing debates about vaccine efficacy and safety.
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