Shares of Pfizer need a reset from the Covid-19 pandemic before they will work again, according to Wells Fargo. The firm on Monday downgraded shares of the pharmaceutical giant to equal weight from overweight and trimmed its price target to $50 from $54. The new price target implies a nearly 4.5% upside from where shares closed Friday. Pfizer shed 1.5% in premarket trading following the downgrade. "We think PFE needs a COVID reset before the stock could work again," analyst Mohit Bansal wrote in a note. While the firm thinks Pfizer could have an attractive long-term profile as it aspires to grow its top line, and it's doing the right things to get there in terms of mergers and acquisitions, it will likely take time for investors to appreciate this. "Meanwhile, uncertainty around COVID business could make investors nervous," Bansal added. Lower revenue, higher expenses Wells Fargo lowered its 2023-2025 earnings per share estimates on the company due to lower Covid revenues and higher expenses. Now, its earnings estimates are 20% to 30% below consensus. The future of Paxlovid is one of the reasons for the downgrade. "Paxlovid is an even more uncertain story as real use has been lower than expected," Bansal said. "The US government may have > 12M or > 60% of the supplied drug remaining, which could make 2023 sales low." Even including China demand, Wells Fargo is below consensus on the drug, seeing limited opportunity in the country without national reimbursement. Declining Covid sales will likely impact the margin profile of the company, which will deteriorate in the near-term, according to the note. Wells Fargo now models an operating margin decline from 41% in 2022 to 32% in 2023 before an improvement to 33% in 2024 and 34% in 2025. Of course, there could be some hope coming soon. The Covid reset could happen when guidance is provided on the company's fourth-quarter 2022 earnings call, Bansal said. — CNBC's Michael Bloom contributed reporting.