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Here's the Single Most Important Detail in Pfizer's Q3 Update

By Keith Speights – Nov 4, 2021 at 5:55AM

Key Points

  • Pfizer delivered outstanding results in the third quarter with strong revenue and earnings growth.
  • The most important detail, though, in Pfizer's Q3 update was its forecast for 2022 COVID-19 vaccine sales.
  • Pfizer's Comirnaty guidance for 2022 is key because it sets a realistic expectation for investors.

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Hint: It's not revenue or earnings.

Pfizer (PFE -0.79%) hit a home run in the third quarter. The ball nearly went out of the park altogether.

The big drugmaker reported Q3 revenue of $24.1 billion, up 130% year over year. Adjusted earnings soared 133% to nearly $7.7 billion. Both top and bottom lines handily beat Wall Street estimates. 

Pfizer even raised its full-year 2021 guidance. It now expects revenue between $81 billion and $82 billion, a 94% year-over-year increase at the midpoint of the range. The company projects adjusted earnings per share will be between $4.13 and $4.18, up 84% at the midpoint.

But while those were great numbers, there was another one that's even more critical for the future of the big-pharma stock. Here's the single most important detail in Pfizer's Q3 update.

A healthcare professional giving a shot to a person.

Image source: Getty Images.

An unusual revelation

In his prepared remarks, Pfizer CFO Frank D'Amelio noted that it isn't the company's "normal practice" to discuss its outlook for the next year in its Q3 conference call. However, D'Amelio had an unusual revelation this time. He specifically talked about Pfizer's expectations for 2022 sales of its COVID-19 vaccine Comirnaty. 

D'Amelio stated that Pfizer projects 2022 Comirnaty sales of around $29 billion. He noted that the company has the capacity to produce 4 billion doses next year but anticipates recognizing revenue for around 1.7 billion doses. 

Why did D'Amelio decide to provide this unexpected forecast? He said, "I wanted to make a brief comment related to potential Comirnaty sales next year as we have noticed some estimates of those sales to be very high."

The Pfizer CFO didn't specifically mention which Comirnaty sales estimates are "very high." However, it wouldn't be surprising if a recent Financial Times report about Airfinity projecting that Comirnaty would generate $54.5 billion in 2022 sales caught Pfizer's attention.  

Why it matters

D'Amelio added that Pfizer "continues[s] to engage with governments regarding potential further orders for 2022, including doses for which certain governments have the option to order and take deliveries in 2022." That $29 billion sales projection could, therefore, be a little pessimistic.

However, Pfizer's decision to reveal its expected 2022 sales for Comirnaty matters because it should help ground investors in reality. The COVID-19 vaccine market probably isn't going to expand significantly going forward. Based on Pfizer's projected 2021 Comirnaty sales of $36 billion, the market could instead decline after this year.

Pfizer should be set to have a tremendous performance next year. Sales of the company's other products, excluding Comirnaty, rose 7% year over year in Q3. If that trend continues into 2022, Pfizer will likely rake in close to $78 billion in total revenue. That would be the drugmaker's highest revenue ever, except for what it expects to make this year.

It's also possible that the introduction of new products could make 2022 an even stronger year than 2021. For example, Pfizer hopes to win authorizations or approvals for its COVID-19 pill in the first half of 2022. 

Beyond 2022

Pfizer's estimated Comirnaty sales for next year should also prompt investors to think beyond 2022. And there are reasons for optimism and concern.

The good news for Pfizer is that it continues to expect annual revenue growth of at least 6% and double-digit earnings-per-share growth through 2025, excluding Comirnaty. Pfizer also continues to outperform the industry in end-to-end clinical success, with 21% of its clinical programs ultimately winning approvals, compared to only 11% for the industry.

However, no one knows for sure how the COVID-19 vaccine market will shake out once the pandemic is over. Pfizer also will begin to experience a patent cliff in the second half of this decade that could cause serious revenue deterioration.

That makes it critical that Pfizer uses its Comirnaty-fueled fortunes to build up its pipeline and product lineup with new drugs and vaccines that can serve as growth drivers for the future. As some farmers like to say, it's wise to make hay while the sun shines.

Keith Speights 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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