Pfizer (PFE) Looks Like a Buy as Vaccine Chances Surge

There's little doubt that in the pharmaceutical market right now, the biggest prize of all is a coronavirus vaccine. Companies throughout the market are jockeying frantically for position, each one desperate to gain that first-mover advantage of being the first company with a potential way to halt the disease and get the world back to some kind of normal. We've talked about some of these firms before, and now we've got a follow-up on one of the leaders that just got a fresh wind: Pfizer (NYSE:PFE).

Holding On to the Gains...Mostly

A little shy of two weeks ago, we'd seen Pfizer get a nice upward tick thanks to the results of its first coronavirus test. It spent most of the week ahead of the Fourth of July tracking upward like a fresh-lit bottle rocket, but the gains proved at least partially temporary.

When we last talked about Pfizer back on July 2, the share price closed at $34.51. It held that price into July 6, then promptly gave back some of those gains. Not many, though; on July 10, the stock closed at $33.83 a share, which is pretty minor as profit-taking goes and still represents a closing price above where it was even on July 1, just ahead of the newest announcements.

This suggests that the stock's current level is sustainable, or at least a sufficiently large body of shareholders believe that it is. If they didn't, there likely would have been quite a bit more profit-taking going on than there was, retracing back to just ahead of the bump's starting point on June 30.

Good News Gets Better at Pfizer

So what's backing this projection? Some of the latest news about Pfizer makes suggestion enough that this could be one to keep, and maybe even step up a current position in. The most recent word says that not only is Pfizer having some solid results with its latest coronavirus vaccine tests, but also, it's also landed a “fast track” designation from the Food and Drug Administration (FDA).

Pfizer didn't develop that drug in isolation, however; it was a joint development with another drugmaker BioNTex (NASDAQ:BNTX), and it appears to be working quite well. Sufficiently so, in fact, that the FDA is stepping up its own involvement therein. The early-stage human trials have gone well, particularly on the 10- and 30-microgram doses. The 100-microgram doses, however, went a bit too far, reports noted.

While the results from the German trials are still a little ways off—they're still expected by the end of the month—success on that front too should be a big step to regulatory approval. Production isn't expected to be a problem either, as Pfizer is ready to capitalize on such a win with up to 100 million doses by the end of this year—and that will be at best three months' run; Pfizer's CEO noted that even with the fast-tracking, approval almost certainly won't be before October—followed by as many as 1.2 billion doses before the end of 2021.

A Few Creaks, But A Solid Foundation

Here's the good news immediately: Pfizer is a big name in the pharmaceutical field and has been for years. It can, and has, delivered big results. You can take a look back at its five-year charts and see that the company has held a share price averaging around $35 for most of that time, except for a brief period when the share price jumped up to the $40-$45 range. It didn't stay there long, and it wasn't the Massive Indiscriminate Coronavirus Sales Event that did it, either. That drop came about this time last year, when “coronavirus” was a fancy word for “head cold.”

There are some risks to picking up Pfizer, but not many. One big risk is that the German tests don't follow suit from the earlier testing, and given that we're talking about a drug interacting with a disease, the chances of that don't seem good. Another is any kind of potential trouble that hampers production rates; if it actually has a working coronavirus vaccine, demand will be brisk, and it will be immediate. If it can't tool up to meet that demand, it's the opportunity a Pfizer competitor will die for.

If the current tests hold out, this could be ready to go fairly soon, and with sufficient production capability to inoculate about one in three people in the US by the end of this year—one in seven worldwide, roughly, by the end of 2021—the ultimate result does look pretty bright. It depends on several moving parts doing their job and nothing unexpected going wrong, but Pfizer as a buy is starting to look good.