Pfizer on Wednesday released financial guidance for 2024 that is billions of dollars short of what investors had anticipated, raising questions about the company’s strategy and sending shares lower than they had closed in a decade.
shares were down 7.5% on Wednesday to $26.45 after falling as low as $25.76 in morning trading. Pfizer shares haven’t closed below $25.80 since May of 2013.
The new guidance could undermine investor faith in Pfizer’s strategy of spending big on acquisitions to make up for the patent expirations expected by the end of the decade.
Pfizer has made a long list of multibillion-dollar acquisitions in recent years, and on Tuesday announced it had received regulatory clearance to spend $43 billion to buy cancer-focused biotech Seagen.
Despite that cash outlay, earnings and revenue are underperforming as the company struggles through the collapse of the Covid-19 market. Pfizer said Wednesday it expects a combined $8 billion in revenue from its Covid-19 products in 2024, below the FactSet analyst consensus estimate of $13.8 billion.
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By midday Wednesday, speculation about whether the company might seek to replace CEO Albert Bourla after next year set in. In an email to investors, Mizuho healthcare equity strategist Jared Holz wrote that it “could be time for new leadership.”
Pfizer didn’t immediately respond to a request for comment.
In its announcement, Pfizer said it expects adjusted diluted earnings of between $2.45 and $2.65 a share in 2024, not including impacts from Seagen. Wall Street analysts had expected significantly higher earnings of $3.17 per share.
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Pfizer expects 2024 revenue of between $54.5 billion and $57.5 billion from its current business, plus $3.1 billion from Seagen and $1 billion from an accounting change. Wall Street analysts had expected revenue of $62.6 billion, projections that likely didn’t include any Seagen contribution.
The regulatory clearance of the Seagen deal, which Pfizer announced Tuesday, represents a significant step in Pfizer’s plan to make up the $17 billion in annual revenue it expects to lose from patent expirations by 2030. The company had set a goal of achieving $25 billion in annual revenue by 2030 through business development; it expects Seagen to contribute $10 billion of that. Another $10.05 billion comes from deals the company closed last year.
The news that the Seagen deal will go through, however, wasn’t enough to forestall Wednesday’s dramatic selloff.
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Beneath the mismatch in revenue expectations was what appears to be a broad gap between where the company sees the Covid-19 vaccine and therapeutic market headed, and where investors expect it to go. Pfizer’s revenue guidance for sales of its Covid-19 products is billions of dollars below the FactSet estimate.
On an investor call Wednesday morning, Bourla called the Covid-19 projections “realistic and conservative.”
“We want to be reliable so that we will not create uncertainty, which was the case unfortunately this year,” Bourla said.
Shares of Pfizer’s Covid vaccine competitor
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fell 4.5% following the news. In an interview with Barron’s on Wednesday morning, Moderna CEO Stéphane Bancel said the Pfizer announcement had no implications for his company.
“People read across things,” Bancel said. “It doesn’t mean they’re right.”
Modern said in early November that it expects product sales of $4 billion in 2024, which was short of the FactSet analyst consensus estimate of $6 billion at the time. Bancel told Barron’s the company will stand by that guidance. “In the U.S., we’ve been gaining share,” he said.
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Moderna said in November that its Covid vaccine market share in the U.S. was 45% in 2023, up from 36% in 2022. “I don’t think Pfizer was anticipating that they were going to lose share so fast in the U.S.,” Bancel said.
Pfizer’s Bourla said in a statement Wednesday morning the company’s product portfolio remains strong.
“We expect our cost realignment program to deliver savings of at least $4 billion by the end of 2024, which puts us on a path to potentially regain our prepandemic operating margins,” Bourla said.
Pfizer projected growth of between 8% to 10% in operating revenue for its combined Seagen and Pfizer portfolio of other products.
Excluding revenue from Comirnaty and Paxlovid—Pfizer’s Covid vaccine and pill—and the expected contribution from Seagen, Pfizer expects to achieve full-year 2024 operating revenue growth of 3% to 5%.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Adam Clark at adam.clark@barrons.com