Please ensure Javascript is enabled for purposes of website accessibility

If Pfizer's Vaccine Is a Winner, Why Did This Analyst Downgrade Its Stock?

By Eric Volkman - May 6, 2021 at 4:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Mizuho Securities' Vamil Divan expresses concern about the company's post-coronavirus future.

Pfizer (PFE 1.31%)had a fine first quarter by many standards. Fueled by widespread demand for its BNT162b2 coronavirus vaccine, it crushed both trailing and forward analyst estimates.

One prognosticator following the company, however, isn't ready to pop the Champagne. On Thursday -- two days after those quarterly results were published -- Vamil Divan of Mizuho Securities downgraded his recommendation on the stock from buy to neutral. He maintained his $42 per share price target, which is about 7% above where it's currently trading.

A researcher studying a sample in a petri dish.

Image source: Getty Images.

The analyst credited Pfizer with a "stunning beat" in his new research note. However, he wrote, "Cash flows from COVID-19 vaccine sales provide Pfizer with greater optionality, but we wait to see how Pfizer allocates that capital before assessing whether they have improved their 2026-2030 outlook."

As with any pharmaceutical company, Pfizer's future depends greatly on its pipeline. Since much of the focus on Pfizer as a company and as a stock has, understandably, been on BNT162b2 over the past year, more attention needs to be paid to its research and development activities.

"While Pfizer's near-term outlook remains strong and has been boosted by their COVID-19 vaccine, we believe it will be important for these pipeline catalysts to deliver in the coming months in order for investors to gain more comfort with Pfizer's outlook beyond the next four years and drive Pfizer shares meaningfully higher," Divan wrote.

BNT162b2 is currently in widespread use in countries around the world, and particularly in the U.S., where it is one of only three coronavirus vaccines authorized for emergency use by the FDA. However, both cases and fatalities have been dropping significantly in the country.

Pfizer's shares closed Thursday's trading session down by 1%, against the 0.8% rise of the S&P 500 index.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pfizer Inc. Stock Quote
Pfizer Inc.
$49.22 (1.31%) $0.64
BioNTech SE Stock Quote
BioNTech SE
$147.94 (0.22%) $0.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.