Pfizer's Cost-Cutting Measures

Pfizer Inc. reassured investors on Monday that it is taking proactive steps to cut costs and recover from the underwhelming sales of its COVID-19 products. In a call with analysts, Pfizer executives outlined a cost-cutting program that was initially announced on Friday. The program, which aims to achieve savings of at least $3.5 billion, will be implemented across all parts of the business and regions, according to Pfizer Chief Financial Officer Dave Denton.

Despite the cost-cutting measures, Denton assured that Pfizer's planned acquisition of Seagen Inc. will not be affected. The acquisition is still on track to be completed later this year or in early 2024.

Pfizer executives pointed out that the relatively low adoption rate of the latest COVID-19 vaccines, which were introduced to the market in September, can be used as a conservative estimate for future vaccination rates. They acknowledged the presence of "COVID fatigue" among the public, with many individuals wanting to move past the pandemic. Additionally, they noted the surge in anti-vaccination sentiment. However, Pfizer CEO Dr. Albert Bourla emphasized that those who continue to seek vaccines and treatments amidst these challenges truly value protection and treatment, suggesting a sustained demand in the coming years.

These comments from executives come in the aftermath of Pfizer's revision of its full-year revenue guidance, with a $9 billion reduction attributed to lower COVID sales expectations. The company now anticipates full-year adjusted earnings per share in the range of $1.45 to $1.65, compared to the previously forecasted $3.25 to $3.45.

Overall, Pfizer is taking decisive measures to address the impact of underwhelming COVID-19 product sales through comprehensive cost-cutting initiatives. By targeting cost reductions and acknowledging the current market dynamics, the company aims to navigate these challenges and ensure sustainable growth.

Pfizer Faces Challenges Ahead, Analysts React

The recent announcement from Pfizer regarding a significant reduction in its full-year revenue forecast has sparked mixed reactions among analysts. BMO Capital Markets analyst Evan David Seigerman, for instance, has revised his price target for Pfizer shares downward to $33 from $44. Seigerman believes that while the guidance cut was necessary, it may not be enough to restore management's credibility. He emphasizes the importance of this moment in the post-COVID Pfizer narrative and urges management to seize the opportunity.

Despite this setback, Pfizer executives remain optimistic about the future. They believe that their combined respiratory vaccines in development, including a single-shot vaccine that offers protection against both COVID and flu, could help boost vaccination rates in the coming years. Pfizer CEO Bourla expressed his commitment to developing combination vaccines and explained that they would make it easier and more convenient for patients to receive protection against respiratory diseases.

Leerink Partners analyst David Risinger reacted positively to Pfizer's announcement that net operating expenses are projected to decline by $3.5 billion by 2024, excluding the Seagen acquisition. Risinger considers this development a pleasant surprise. However, he maintains a market-perform rating on Pfizer shares due to uncertain long-term growth prospects.

In response to Pfizer's update, investors found some short-term comfort, leading to a 5.4% rebound in the company's stock. Despite this regain, Pfizer's stock is still down 34.5% year-to-date, in contrast to the 14% rise of the S&P 500 SPX.

The implications of Pfizer's news have affected other vaccine manufacturers as well. Moderna Inc.'s stock, for example, experienced a 6.7% decline on Monday morning, despite the company's affirmation of its existing COVID sales guidance.

As Pfizer navigates these challenges, industry analysts continue to closely monitor the company's performance and reassess their projections.