Why Pfizer? (symbolization:PFE) Valley deteriorates–Lilly (symbolization:LLY) at an all-time high?
introduction: GodDivision between the areas of specialization of the pharmaceutical manufacturers in the last century was clear, Manufacturers of pharmacological drugs, Generics and biotechnologies. The company most associated with pharmacology was Pfizer (symbolization:PFE). The medical biotechnological pharmaceutical industry began to develop after World War II and following major scientific breakthroughs the field.
Wall Street gave the subject recognition in the early 1990s-80 With a series of large issuances and the company that led the field in the USA“B was an amg‘N (symbolization: AMGN). The generic industry received official recognition (In practice it already existed) After you sleep 1970 established the Food and Drug Agency, God-FDA, the mechanism for testing and approving generic versions of pharmacological products for which patent protection has ended. The world’s leading company in the field, was, Until 2010, nature (symbolization: TEVA). Along with the three areas mentioned above“The field of medical equipment, which received a strong boost from technological progress, continued to expand. the division, Among these four sectors was, until the years-90, defined and clear, Probably on Wall Street. But towards the end of the last century and due to the changes and disruptions of the technology and information revolutions, A process of transition between the fields has begun.
The current situation is All the leading companies, in all four areas, Expand the activity to the other areas. All of this as mentioned happened because of the rapid technological and scientific progress in the medical field and it is a process of transition, With the help of technological progress, From the laboratory and the academy to the business world.
This transition gained momentum after Completion of the human genome sequence in the mid-1980s-90 and continues even today. The process has allowed scientists around the world to better research new treatments for diseases of genetic origin such as cancer, heart diseases, Diseases of the central nervous system, etc‘ and translate the research into medicines, vaccinations, prevention etc‘ and actually forced the membership “play on all courts“. The leading global companies no longer have lines that separate the pharma industries, The bio and the generic.
The leading companies made the transitions through acquisitions and mergers but not only, They also established designated divisions. Pfizer, as an example, no longer fits the definition of “A pharmaceutical company“. She defines herself as“bio company–pharmacological (American multinational pharmaceutical and biotechnology corporation) But works in all fields of medicine, From stem cells and gene therapy to the field of generics, it is one of the leaders there (Higher than-300 Generic drugs).
What is Pfizer doing today?? The company is developing, manufactures and markets medicines and vaccines in various therapeutic areas such as cardiovascular diseases, migraine, women’s health, Infectious diseases with unmet medical needs (From meningitis to virus vaccines), Prevention and treatment b– COVID-19, and products mRNA potential futures, Anti products–viral, Medicines and vaccines in various therapeutic areas, Both biological drugs and biosimilars (Generics of biomedical products) for chronic immune and inflammatory diseases, Sterile drugs for injection and anti–infectiousness, small molecules, Immunotherapies and biological preparations and more. On the open side and Pfizer production is one of the leaders in what is known“Contract manufacturing business ((contract manufacturing to wholesalers, retailers, hospitals, clinics, Government agencies, Pharmacies, Individual supplier offices, Retail pharmacies and integrated delivery systems, As well as the Centers for Disease Control and Prevention.
The company has cooperation agreements with a company Bristol-Myers Squibb (symbolization:BMY) In opening anti-clotting substances and substances for the treatment of metabolism, with a company Astellas Pharma (ALPMY) Japanese for the development of prevention for hormone-sensitive metastatic prostate cancer, with the biotech company Myovant Sciences The very interesting private from Switzerland to open a prevention against infertility in women. With Merck KGaA (symbolization:MRK.DE) The big Germany in the field of cancer, With BioNTech SE (symbolization:BNTX) who developed the corona vaccine and more.
The difference in estimates between Pfizer and Eli–Lilly: Let’s start by saying that if you compare the development of the activity of PFE which we described for the activity of LLY which you can see on their website, They are very similar, Both started by developing pharmacological drugs based on chemical compounds and today they operate in all fields of medicine and in all sectors, What we tried to explain in the introduction. The reason why the comparison toLLY And not to another company is because of the big difference in evaluation and because of the fact that both companies are well known to me.
Eli Lilly (symbolization:LLY), which presents, To-2022, Sales, Operating and net profit of 28.5, 8.3 and-6.2 A billion dollars or a profit of 6.9 dollars per share valued at-410 a billion, The stock is at an all-time high and-5 The last years yielded 450% (without the dividend), about 90% More than Pfizer (symbolization:PFE). LLY Traded according to a factual multiplier (historitic) of over-68 and an estimated multiplier for-2023 of over-47 time. Pfizer introduced, B-2022, revenues, Operating and net profit of 100.3, 37.3 and-31.4 A billion dollars or 3.85 dollar per share. stock PFE Traded at a factual multiple of 7.15 and of valued to-2023 of 11.6. 9 Analysts have updated their reviews on LLY Since the beginning of April 2023, Everyone recommends b“buy” And everyone raised the target price. Since the beginning of April, the stock has risen by-26.5% And the consensus price target is $401.6. at PFE only 3 analysts (The most senior there is, from Barclays, Bank of America and Morgan Stanley) We have updated since the beginning of April, everyone b– HOLD And they all lowered the target price to an average of $43, where the general consensus stands at $48.6.. We note that at 2016 And throughout most of the century-20 led PFE in return when at the end 2018 cross LLY You PFE UpwardsLLY came up, Since November 2018 B-% 304 Whereas PFE dropped b-% 4.
Those who know the history of the companies LLY and-PFE and knowing Wall Street’s attitude to the evaluations of the giant companies in the medical fields, one cannot help but wonder about the current enthusiasm forLLY Compared to the disappointment from Pfizer. It is true that Pfizer has enjoyed huge revenues and profits from the corona in years 2021-2 more than doubled compared to2019-20 (Operating profit increased by 340% between 2020 To-2022) and that as a result its stock rose, In December 2021, for the all-time high of 60 dollar so expectations were created (justified) That“Corona vaccine celebration at Pfizer” will end when the epidemic ends, but this clearly does not justify that in the current situation (and in the calculation of the decrease from the vaccine contribution) Preferred investment inLLY the“as expensive as inPFE which trades at such a low multiple.
This gap in estimates between LLY To PFE Interesting to many commentators and experts during the last years. since the last quarter of 2020 The gap is growing and widening and many articles and commentaries deal with trying to decipher it. Scroll through the question and you will get dozens of articles and we have checked some of them. in august 2020 Compare Motels website health expert Paul Bean LLY To-PFE, in the title “Who is better to invest now??”. Both companies were making progress at that time in an attempt to develop a vaccine against the corona virus. Of course, the writer did not know who would win the race for the vaccine and therefore only evaluated the factual data available at the time. He concluded the article as follows, “Pfizer is now trading at-P/E Trailer of 15 and-P/E Go ahead of 13.5 And that compares favorably to-P/E Ali’s trailer–Lilly of 24.5 And-P/E Go ahead of 20.1. Pfizer shows higher revenue, Higher net profit, Higher profit margins and a more attractive valuation, I think Pfizer is the better pharma buy today“. The situation today has not changed, even better for an investor in Pfizer and the conclusions that are being sought are completely similar. A year later, in August 2021, Pfizer received FDA approval while LLY stopped development. Despite this, the gap increased significantly during the year in favor of LLY. We examined comparisons made Also in 2021 and throughout 2022 and we discovered many who recommended to prefer PFE like Zacks Equity Research Group and– seekingalpha.com There they summarized the comparison in this assessment“the market value of LLY higher than that of PFE – This anomaly will not last“,
Is the pipeline of future developments the reason for the gap? definitely not. Both companies have several drugs in development that may be a hit and both companies continue to acquire any company that has potential in their fields of practice and not only. Lilly has Alzheimer’s drugs in development and Pfizer has drugs for colon infections and a vaccine for respiratory problems, This is not the reason for such a large gap when the confirmation FDA still in its infancy.
Since the beginning of the month, Morgan Stanley has issued 3 Updates on Pfizer. One on the first quarter results, The second is about the drugs in the pipeline and the attempt to acquire the cancer treatment companySeagen (NYSE:SGEN) and the third about a tour organized for them in the company. Pfizer, incidentally, It is the company on which more studies are conducted than any other company-500 SP. We have read the three reports and what is most important in all of them is the sentence“We continue to see the stock as having a fair value“. That is, despite the declines, In their opinion, the share price justifies the recommendation– HOLD theirs which is also the consensus as stated. Morgan’s analysts are good and according to the studies we read carefully they took everything into account, but I find it difficult to accept this consensus. the problem, In my opinion, lies in the distortion created due to the corona vaccine which significantly boosted revenues and profits and created a situation where they expected a sharp decrease in revenues and profitability after the epidemic ends (The sales increased from46 million in2020 To-81 B 2021 and to100 million b 2022 went down this year to-68 one million). I am also bothered by the fact that Pfizer, Despite the decrease in vaccinations, It has beaten the consensus in each of the last four quarters and analysts are ignoring it. To me this means that Pfizer is returning to the historical path and if that is the case then the current consensus doubles to2023, which is significantly lower than all competitors, Attractive for investment. It “will be revealed” to investors sooner or later and if, Additionally, One of the super drugs in the pipeline will be approved and purchased Seagen Pass successfully, the situation will change quickly, but factually it is hard to know.
Not all experts are disappointed with Mr. Borla. B-trefis.com Summarizing the situation like this“Given its strong overall operating performance and financial position there is (At Pfizer’s current price) Very little to fear And in our opinion the investment is attractive” And they also compare the investment inPFE Vs LLY and write, regarding LLY, “Given its moderate overall operating performance and financial position, There is an almost equal mix of good and bad data in the stock LLY But given its highest esteem, We think the stock is not attractive.
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