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Buy Pfizer Before the Smart Money Catches On to the Plot

Today, Pfizer is profiting from Covid-19. But the vaccines have shown that mRNA technology can be used effectively. And that opens the door for future PFE stock growth

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This story originally appeared on MarketBeat

The sell-off in PFE Stock After Earnings is Based on Quick Trigger Fingers

Pfizer (NYSE:PFE) stock is dropping in mid-day trading after the company delivered a mixed earnings report. The company delivered a strong beat on earnings per share of $1.08 compared to the analysts forecast for 86 cents per share. But it was the revenue number that has investors pulling back.

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Pfizer's Q4 revenue came in slightly below the forecasted $24.12 billion with $23.84 billion. However, that also meant that the company also came in below the full-year forecast by about half a billion dollars.

But is that a reason for PFE stock to be down 4.5%? I don't think so and believe that once the smart money takes a closer look at Pfizer, the stock is going to climb.

It Wasn't a Bad Report

Even though Pfizer came in short on revenue expectations, it still delivered record revenue of over $80 billion. Furthermore, the company gave full-year guidance for 2022 of $98 - $102 billion. And the earnings story is even better. Pfizer is forecasting full-year EPS between $6.35 and $6.55. At the low end of that guidance that would be a 68% increase from the total of $3.76 the company delivered for full-year 2021.

I suppose if analysts were to nitpick, they would point out that the company had lackluster sales in its internal medicine and hospital segments. In fact, when you take out the company's Covid-related revenue streams, revenue fell 2%.

But at this point, it seems that investors are jumping to a pre-determined conclusion. Unless Pfizer beat on both the top and bottom lines it was going to get knocked down.

That's not a compelling argument to us. And after plunging below $50 per share it looks like the stock is beginning to stage an inner day comeback.

On the Forefront of the Future of Medicine

Of course, the major reason that Pfizer has generated record profit and revenue is its Covid-19 portfolio of vaccines and therapeutics. In fact, the company said it expects to generate more than $50 billion between its Covid-19 vaccines and Paxlovid, its antiviral coronavirus treatment pill.

Any discussion of the company's Covid-19 vaccine stirs strong emotions. One reason for this is the use of mRNA technology in the development of the vaccine. It's true that the Pfizer vaccine which it developed with BioNTech (NASDAQ:BNTX) as well as the Moderna (NASDAQ:MRNA) vaccine are the first examples of mRNA being used in a vaccine.

But if the company's first mRNA vaccine was designed to treat rare genetic conditions, I suspect the public reaction would be different. And yet, that's exactly what Pfizer is eyeing for its next application of messenger RNA. The company is partnering with Beam Therapeutics to use mRNA to treat rare genetic diseases of the liver, muscle, and central nervous system.

And this is the plot that we believe the analysts are missing. Today, Pfizer is profiting from Covid-19 for sure. But the vaccines have shown that mRNA technology can be used effectively. And that opens the door for "customizable medicine" that has always been the holy grail.

Analysts Still Love PFE Stock

In the month heading into earnings, Pfizer stock had received multiple price target increases. And many of those targets are much higher than the $58.56 consensus price target that the stock had going into earnings. Typically, the weeks after an earnings report is a time for analysts to reassess their opinion. We suspect that other analysts are likely to confirm the bullish outlook for Pfizer. And that would be bullish for PFE stock.

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