Pfizer Inc (NYSE: PFE) shares jumped more than 3.0% on Monday morning to a record $51 as its COVID-19 vaccine secured full FDA approval.
The announcement comes on the same day when the U.S. pharmaceutical giant said it will buy Trillium Therapeutics Inc for $2.26 billion to expand its footprint in blood cancer therapies.
Divan’s remarks on CNBC’s “Squawk on the Street”
On CNBC’s “Squawk on the Street”, Mizuho’s Vamil Divan attributed the price action on Monday to several factors but said the U.S. FDA approval was surely the biggest news.
“The approval came a bit earlier than expected, and the stock was already doing good in anticipation. The booster opportunity also helped the stock, and then they announced a small bolt-on acquisition this morning. So, lots of factors, but the approval was surely the big news.”
Divan has a price target of $43 on Pfizer
Divan’s price target on Pfizer stands at $43 that translates to an about 16% potential downside from here. The full FDA approval and the debate around the booster shot, he agreed, could push Pfizer’s sales above his current estimates but quoted ‘uncertainty’ for not revising his outlook at this point.
“We’re trying to see how this all plays out before giving too much credit. Is it going to be an annual booster, or would it be like a third shot and then they’re done? So, from a scientific perspective, I think the uncertainty is still there,” he added.
The key to sustaining momentum for Pfizer
Pfizer is generating a lot of cash from its COVID-19 vaccine that it developed in collaboration with German BioNTech – enough to satisfy the investors and support the stock. But what matters more, as per the Mizuho analyst, is the way it uses this cash.
“If they make investments with this cash, there could be a lot more upside; the multiple could go a lot higher. If not, it will raise a question about their outlook in 2026 to 2029 when they’ll lose up to $20 billion in sales from some of their key current growth drivers,” Divan said.
The post Here’s why Mizuho’s Divan still sees a 16% downside in Pfizer appeared first on Invezz.
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Wajeeh Khan
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