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Why Pfizer Stock Bolted Higher in July

By George Budwell – Aug 10, 2020 at 10:00AM

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The pharma titan's experimental COVID-19 vaccine caught investors' eyes last month.

What happened

Mega-cap pharma stocks rarely surge by double digits over just a 30-day period. But that's exactly what Pfizer's (PFE 0.90%) stock accomplished during the month of July. 

Despite facing falling sales for a host of former blockbuster medicines and the impending spin-off of its legacy products unit, Pfizer's shares gained an astounding 17.7% in value last month, according to data provided by S&P Global Market Intelligence. The pharma giant thus tacked on a remarkable $33 billion to its market cap last month.   

A researcher injecting a vaccine into a minature Earth.

Image source: Getty Images.

So what

What sparked this rapid growth spurt? The singular reason is the big pharma's COVID-19 vaccine platform. In brief, Pfizer and its German partner BioNTech (BNTX -0.68%) could be one of the first teams to bring a viable COVID-19 vaccine to market.

What's more, this dynamic duo secured major supply agreements with both the U.S. federal government and the United Kingdom recently. Pfizer thus stands to haul in a hefty payday from this COVID-19 vaccine effort, especially if the pandemic persists beyond 2021.

Now what

Before Pfizer or BioNTech book any sales for this desperately needed vaccine, though, their mRNA vaccine platform still needs to hit the mark in a pivotal-stage trial. The bad news is that the vast majority of vaccines have historically failed to pan out in late-stage trials.

So it might be a good idea to watch this high-flying pharma stock from the safety of the sidelines for now. Any unexpected clinical or regulatory hiccups could send Pfizer's shares crashing back to earth, after all. 

George Budwell owns shares of Pfizer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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