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The pandemic was a period we had never experienced before in our lifetimes, and hopefully never will again.

People were forced to stay hunkered down in their homes. Many companies had to suspend operations. Schools closed. Hospitals overflowed. Around the world, millions died.

As the medical community struggled for answers, two companies emerged as game-savers. One was Moderna Inc. (MRNA-Q). The other was Pfizer Inc. (PFE-Q) and its German partner BioNTech Se ADR (BNTX-Q). They developed effective COVID-19 vaccines in record time, which were instrumental in allowing governments to lift restrictions and return life to something resembling normal.

For Pfizer, the success of its Comirnaty vaccine and its antiviral drug Paxlovid couldn’t have come at a better time. The stock was trading at US$27.52 in late March, 2020, at the time when the impact of the pandemic was becoming clear. The share price took off when Pfizer’s vaccine was approved and released to the public. The stock briefly topped US$60 in late December, 2021, as Comirnaty sales boomed.

Since then, it’s been all downhill for the company. COVID-19 hasn’t disappeared but the panic it created has. As new variations of the vaccine were rolled out, public indifference increased. After receiving three or four injections, the fatigue factor set in.

The impact on Pfizer was staggering. In fiscal 2021, the company reported global Comirnaty sales of US$36.8-billion, up from almost zero the year before. In 2022, Comirnaty sales increased slightly to $37.8-billion, with Paxlovid contributing an additional US$18.9-billion.

That was the peak. In 2023, sales of the COVID-19 products fell off a cliff to US$11.2-billion for Comirnaty and only US$1.3-billion for Paxlovid. The company was unable to make up the difference with other products. Overall, 2023 income was down 42 per cent to US$56.5-billion. Earnings per share were off 72 per cent, to US$1.84 from US$6.58. At the start of 2024, the shares were trading at under US$30. They still are, closing Friday at $28.09.

The first six months of this year were weak. Revenue was US$28.2-billion, down 11 per cent from the previous year. Comirnaty sales were only US$548-million, off 88 per cent from the prior year.

The company launched a major cost-cutting program and made a significant acquisition, buying cancer specialist Seagen for US$43-billion, a move which Pfizer expects to boost revenue and profits.

Meantime, the vultures are circling. In early October, activist investor Starboard Value announced it had taken a US$1-billion position in Pfizer and demanded that the board of directors put pressure on the company’s management to turn things around quickly.

“We measure success in producing blockbuster drugs and we all get measured by our track records. The track record here is not great,” said Jeffrey Smith, Starboard’s chief investment officer.

Last week, Pfizer released its third-quarter results and, while they did nothing to boost the stock, they showed what could be the beginning of a turnaround.

Revenue for the quarter was up 31 per cent over the same period in 2023, to US$17.7-billion.

Reported net income was US$4.5-billion (78 US cents per diluted share) compared with a loss of US$2.4-billion (42 US cents per share) last year. For the first nine months of the year, Pfizer reported a 39-per-cent gain in profits, to US$7.6-billion (US$1.34 per share).

Over that period, Comirnaty sales were off 66 per cent from a year ago. But Paxlovid made a comeback, with sales of almost US$5-billion, up 13 per cent. Non-COVID products also contributed, with blood thinner Eliquis topping the list with sales of US$5.5-billion.

The company raised its full-year revenue guidance to US$61-$64-billion, up from US$59.5-$62.5-billion, and increased its profit forecast.

“Our performance through the first three quarters of the year is the result of our focus on our most important strategic priorities,” said chief executive officer Albert Bourla. “I’m confident that we will deliver on our financial commitments in 2024 and that we are well-positioned to continue advancing scientific breakthroughs meaningful to our patients and our company, as well as creating long-term shareholder value, in the years to come.”

None of this is likely to satisfy Starboard, and the lack of movement in the share price suggests the market isn’t impressed either. So, it would be unrealistic to expect any significant movement in the stock price in the near future.

But this is a case when you’re being well-paid to wait. The stock has a quarterly dividend of 42 US cents a share (US$1.68 a year) to yield 6 per cent. There appears to be no threat to the payout; Pfizer is projecting adjusted diluted EPS guidance of between US$2.75 and US$2.95 this year. So, if you have a position, it looks safe to hold. The dividend is well covered and should support the share price, especially in a declining interest rate environment.

Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.

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