Wells initiates Pfizer at overweight, says Covid treatments are here to stay

Published Thu, Dec 9 20216:44 AM ESTUpdated Thu, Dec 9 20216:59 AM EST

Pfizer is poised to outperform as its Covid treatments stick around and generate major revenue for the company, according to Wells Fargo. "We think the Street is underestimating PFE's potential to dominate the COVID market for years to come," Wells Fargo's Mohit Bansal said in a note Wednesday. Wells Fargo initiated coverage of Pfizer on Wednesday with an overweight rating and a price target of $60. The projection is 16.7% higher than Pfizer's close Wednesday at $51.40. Shares rose 0.8% in premarket trading Thursday. Pfizer's vaccine business could generate more than $5 billion per year for the company "for the foreseeable future," according to Wells' analysis. Waning immunity and new variants mean booster shots will be needed, even if just recommended for high-risk individuals. "We think COVID vaccines will likely become an annual occurrence," Bansal said. Plus, Pfizer's new oral antiviral pill could be a gamechanger for Covid treatment, and in turn, for the company's profit. "The pill, on the other hand, provides another avenue for COVID-related growth and covers the entire spectrum of COVID management," Bansal said. Pfizer is submitting full data on its Covid treatment pill to the Food and Drug Administration soon, CEO Albert Bourla told CNBC on Wednesday . Interim data in November showed the oral antiviral, Paxlovid, reduces Covid hospitalization and death by 89%. An FDA panel in November narrowly endorsed Merck's Covid treatment pill . Merck originally said the drug was more than 50% effective in preventing hospitalizations and death, but a fuller set of data presented to the FDA found the drug is just 30% effective. The drug needs final authorization from the FDA and Centers for Disease Control and Prevention before it's available to the public on an emergency basis. Pfizer's Covid pill could generate $17.6 billion worth of Paxlovid sales in 2022 and $18.2 billion in 2023, Bansal said. Plus, Wells likes Pfizer's core business overall, seeing "pipeline progress as a matter of 'when and not if.'" Shares of Pfizer are up about 40% in 2021, outperforming the S & P 500's 15% gain this year. —CNBC's Michael Bloom contributed reporting.

A woman holds a small bottle labeled with a "Coronavirus COVID-19 Vaccine" sticker and a medical syringe in front of displayed Pfizer logo in this illustration taken, October 30, 2020.

Dado Ruvic | Reuters

Pfizer is poised to outperform as its Covid treatments stick around and generate major revenue for the company, according to Wells Fargo.