UBS reduced its price target on Pfizer (NYSE:PFE) to $24 from $28, maintaining a Neutral rating as the firm highlights several concerns ahead of the company’s first-quarter 2025 earnings. The company’s shares fell more than 3% today.
Analysts believe Wall Street continues to misjudge the impact of the Inflation Reduction Act (IRA) on Pfizer’s revenue model. Management recently explained how high-cost drugs like Ibrance, Xtandi, Vyndaquel, and Xeljanz will face immediate hits due to their swift entry into the catastrophic coverage phase of Medicare’s Part D program. While some lower-priced products—such as Abrysvo, Eliquis, Nurtec, and Paxlovid—will benefit from fewer donut hole contributions, this offset isn’t enough to negate the overall pressure.
UBS also flagged overly optimistic consensus estimates for several key products. For instance, its internal forecast for Paxlovid stands at $566 million, significantly below the consensus of $1.6 billion. Similarly, its projection for Comirnaty is $295 million, compared to $380 million expected by analysts. Sales for Abrysvo are also expected to underperform, with UBS modeling $116 million versus the Street’s $135 million.
UBS is currently 4.8% and 5.6% below consensus for total revenue and EPS, respectively. However, the firm notes that data for danuglipron, Pfizer’s experimental weight-loss drug, could act as a wildcard. If positive results are released alongside earnings and the drug is cleared for a large-scale Phase 3 trial, it could shift sentiment, despite weaker quarterly numbers.
For now, UBS remains cautious, looking for signs of COVID-related revenue stabilization, consistent growth in newer assets, and stronger pipeline execution before adopting a more bullish stance on the stock.
