Pfizer (PFE) stock popped Monday on a report activist investor Starboard Value took a roughly $1 billion stake in the struggling drugmaker.
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Pfizer became a household name in 2020 when it partnered with Germany’s BioNTech (BNTX) to deliver the world’s first Covid vaccine. Later, the company developed an oral treatment called Paxlovid. The two products powered north of $100 billion in sales in 2022.
But the big bet backfired. Pfizer stock, which peaked near 62 in late 2021, is now worth less than half that. Sales have fallen alongside demand for Covid vaccines. This year, Pfizer calls for $59.5 billion to $62.5 billion in sales, narrowly above 2023 levels.
Leerink Partners analyst David Risinger says there’s little Starboard can do to right the ship at the beleaguered drugmaker.
“The company faces revenue growth constraints over the next five years, driven by loss of exclusivities and competitive pressures,” he said in a report. “Pfizer has already engaged in significant cost-cutting and the company’s debt levels are relatively high and may only be partially reduced by monetizing noncore holdings, such as its stake in Haleon (HLN).”
In morning trades, though, Pfizer stock jumped more than 3% to 29.68. Shares are forming a flat base with a buy point at 31.54, but are below a ceiling at their 50-day moving average, according to MarketSurge.
Can Starboard Turn Around Pfizer Stock?
Starboard reportedly approached former Ian Read, Pfizer’s former chief executive officer, and Frank D’Amelio, a previous chief financial officer, to help in its efforts, WSJ reported.
Read was Pfizer’s CEO from 2010 to 2018 and picked current CEO Albert Bourla as his successor. But the business has struggled in recent years.
Pfizer tried to develop a weight-loss drug, but faced problems with safety in early testing. Now, it’s working on a daily pill. But Novo Nordisk (NVO) and Eli Lilly (LLY) have already scored it big with injections worth billions of dollars.
The company has also poured money into acquisitions, including the $43 billion takeover of Seagen. Seagen makes cancer drugs known as antibody drug conjugates, or ADCs. It also bought Arena Pharmaceuticals and a chunk of Biohaven Pharmaceutical.
But the $5.4 billion deal for Global Blood Therapeutics recently faced a setback when Pfizer said it would pull all lots of the approved sickle cell drug Oxbryta from the market following patient deaths. Pfizer snagged Oxbryta in the deal for GBT.
Leerink’s Risinger kept his market perform rating on Pfizer stock.
“We do not see low-hanging fruit to boost shareholder value,” he said.
Representatives of Starboard didn’t immediately return a request for comment from Investor’s Business Daily. A Pfizer spokesperson declined to comment.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
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