Notwithstanding the horrors of the novel coronavirus pandemic, one definitive bright spot that emerged is the rapid-fire development of COVID-19 vaccines. In particular, Pfizer (PFE) and its partnership with German biotechnology firm BioNTech (BNTX) stand out as the leaders, thanks to their messenger RNA-based approach.
Still, it hasn’t always been smooth sailing for PFE stock, and certain headwinds have drawn concerns for investors. Most recently, President Biden supported the proposal to waive patent protections for COVID vaccines, prompting negative reactions to varying degrees for affected biotech/pharmaceutical stocks. (See Pfizer stock analysis on TipRanks)
As well, lingering concerns about the solutions themselves have created a hesitancy issue, stymieing governmental efforts to contain the pandemic. According to data from the Centers for Disease Control and Prevention, vaccine hesitancy is especially strong in the Sun Belt, the region where millennials generally prefer to live.
Although these headwinds are concerning for the near term, over the long run, it’s very possible that the SARS-CoV-2 virus has already imparted a paradigm shift for the biotech space. That shift may bolster the case for being patiently bullish on PFE stock.
Negative Catalysts Piling Up
Initially, the narrative for Pfizer doesn’t seem encouraging in light of the aforementioned challenges. First, Pfizer CEO Albert Bourla warned that waiving COVID vaccine patent protections would spark a panicked run on raw materials. In turn, Bourla believes this dynamic will threaten the integrity of vaccine manufacturing.
This is not an issue to be taken lightly. According to Scientific American, well before the patent waiver proposal, companies were already scrambling to obtain the supplies necessary to produce mRNA vaccines. Furthermore, no one has ever produced such genetics-based vaccines at a global scale, and that imposes incredible pressure on manufacturing facilities.
Adding a strange, almost counterbalancing threat to the raw material headwind is vaccine hesitancy. Common fears include the rapidity of COVID-19 vaccine development and distribution, as well as the “newness” of the mRNA approach.
Though rejection of the Covid vaccine could theoretically ameliorate supply pressures, it’s not helpful in its own right. For instance, at the time of writing, the CDC reports that only 58% of the 18-years-plus demographic have received one dose, and 44% have received two doses. Fears of the vaccine ultimately affect Pfizer's business.
So is this a hopeless situation for PFE stock?
Focus on the Science, Not on the Noise
Admittedly, the optics aren’t great. Nevertheless, the science behind Pfizer’s mRNA vaccine could win out, potentially making its shares a good long-term investment.
Primarily, Pfizer and rival Moderna (MRNA) enjoy emergency use authorization (EUA) for its mRNA vaccines. It’s important to note that the Food and Drug Administration has never approved such nucleic-acid-based vaccines, so the EUA is a huge deal.
Logically, this sets up Pfizer to harness its massive resources to explore mRNA-based solutions for other diseases and conditions. Prior to Covid-19, researchers explored RNA/DNA vaccines against HIV and the Zika virus, among other viruses. Essentially, the coronavirus may spark a renaissance in biotech innovations.
Secondly, as people gradually take the Pfizer vaccine, they will recognize that adverse reactions are few and far between. Better yet, there’s a reason for the lack of adverse reactions: according to research published by The EMBO Journal (European Molecular Biology Organization), “All mRNAs are ultimately degraded at a defined rate.”
This finding suggests that irrational fears of widescale mutations and other bizarre conspiracy theories are unfounded. Instead, the biotech community can deploy mRNA vaccines rapidly as a frontline response to an acute threat without apprehension over a possible impact on the human genome.
Wall Street Weighs In
According to TipRanks’ analyst consensus rating, PFE stock comes in as a Hold, with 2 Buy and 10 Hold ratings assigned in the last three months.
As for price targets, the average analyst Pfizer price target is $44.08 per share, implying around 9.8% upside potential from current levels.
A Tremendous Learning Opportunity
Many assume that after COVID-19 finally fades -- either naturally or through herd immunity -- society will return to normal. On the other hand, that might not be the case, and many believe we should take the harsh lessons learned from this pandemic and better prepare for the next one.
For example, according to a Wired article earlier this year, parts of Africa provide the perfect environment for the next pandemic to arise due to “booming populations and poor health infrastructure.” Naturally, scientists are hard at work to proactively combat such threats.
The one source of hope that we can bank on if things go awry is the emergence of a safe, rapid and highly effective mRNA vaccine. Therefore, if we do have an outbreak of yet another mysterious disease, Pfizer, with its scientific acumen and vast resources, has a significant advantage. That makes Pfizer's stock attractive to investors, despite the headwinds it faces.
Disclosure: Josh Enomoto does not have a position in Pfizer stock.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.