Why is Pfizer stock falling after Q3 results?

Wall Street analysts reasoned out why Pfizer (NYSE:PFE) shares could be under pressure on Tuesday even as the New York-based pharma giant delivered better-than-expected financials for Q3 2024 and raised its guidance.

Pfizer’s (NYSE:PFE) topline for the quarter reached $2.8B, indicating ~32% YoY growth, beating Street forecasts by as much as $2.8B.

However, the company attributed much of the outperformance to its COVID franchise, comprising its COVID pill Paxlovid and Comirnaty COVID vaccine developed with BioNTech (BNTX).

Thanks mainly to U.S. sales amid a global COVID-19 wave, Paxlovid added $2.7B to the topline compared to $0.2M in the prior-year period when the company didn’t recognize sales from its home country ahead of a transition to commercial markets.

Excluding Comirnaty and Paxlovid, Pfizer (PFE) said the topline expanded only 14% YoY operationally, raising concerns about the company’s non-COVID portfolio, which includes its blockbuster products Xeljanz and Ibrance.

Xeljanz, an anti-inflammatory therapy, generated $321M in sales with a ~36% YoY drop globally, and sales from cancer therapy Ibrance fell ~13% to $1.09B, both falling short of Street forecasts, according to Bloomberg data.

Despite the guidance rise, Pfizer (PFE) reaffirmed its prior operational revenue growth target of 9%- 11% from last year, excluding the impact of Comirnaty and Paxlovid.

JPMorgan analyst Chris Schott, who has a neutral rating on the stock, argued that Paxlovid largely drove the company’s Q3 beat.

“Ultimately, we believe stronger new launch performance and/or further progress on the pipeline will be necessary to significantly change the narrative on the stock, which we see as more likely in 2H25 or beyond,” Schott added.

Citi analyst Geoff Meacham, who has a similar rating on Pfizer (PFE), agreed. “We expect PFE shares to trade modestly up today as better 3Q results were largely driven by Paxlovid with no major changes to capital allocation strategies,” the analyst added.

However, Cantor Fitzgerald’s Louise Chen said beat and raise supported her bullish thesis on PFE. “We continue to think there is a lot of value to be unlocked for PFE shares,” Chen added.

Additionally, during the earnings call, Pfizer (PFE) CEO Albert Bourla was largely dismissive of activist investor Starboard Value’s calls to improve shareholder value.

PFE shares spiked in early October amid reports that the New York-based hedge fund was pushing for changes at the company after building a ~$1B stake. “While we agree with some of the points they raised, we have vastly different views on many others,” Bourla said, specifically pointing to Starboard’s concerns on Pfizer’s (PFE) shareholder return and capital allocation strategy.

“We believe that our deals will produce significant shareholder returns, and some of them, like Seagen or BioNTech, have been transformational for Pfizer,” Bourla said, adding, “We are executing on the best path forward to increase shareholder return.”