With a total return of Pfizer‘S (NYSE:PFE) Although the stock is up just 1.9% so far this year, investors may be eager for some sort of catalyst that will push the stock price to rise at a better pace.
They’re lucky. There are three such catalysts coming in the coming months (likely before early 2025) that could cause some market movement for the stock. Let’s take a look at them all.
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As you’ve probably heard, the anti-obesity drug market is currently the hottest in the biopharmaceutical sector. Pfizer’s most advanced candidate, a molecule called danugliprone, has struggled, with mediocre efficacy and several worse-than-expected clinical trial outcomes. Still, an earlier-stage program recently completed its Phase 1 trials, and it could easily be a catalyst for the stock price.
Not much has been announced about the program yet. However, its mechanism of action appears to partially overlap with a candidate called MariTide, which is being developed by Amgen. That makes Pfizer’s program quite unusual in the field of weight-loss drugs, although that difference does not guarantee success or greater efficacy compared to the market leaders. The Phase 2 clinical trial is expected to start before the end of 2024.
For now, pay attention to the data from the phase 1 trial. The company may choose not to publish it even if the results are favorable. But any new information could give investors a little more confidence in the drug candidate’s ability to gain market share if it is ultimately approved for sale, which would boost the stock.
The Chief Scientific Officer (CSO) is one of the most important C-suite roles in any biopharmaceutical organization. Pfizer’s CSO is stepping down after a 15-year term. Management says the executive search process is nearing its culmination and will make an announcement relatively soon.
The appointment of a new CSO will likely be a catalyst for the stock for several reasons. The biggest one is that for a pharmaceutical company, almost all strategic-level research and development (R&D) decisions fall under the purview of the CSO. This executive has the most influence in selecting which disease areas to compete in, which physiological goals to pursue within those areas, and which technologies to use for optimal efficiency.
And if the data is ambiguous, the CSO decides whether it is worth pursuing a program further. In other words, a good CSO can positively impact a company’s performance for many years in just a short time, or a bad CSO can negatively impact it.
This is a case where it makes sense to pay attention to the market’s reaction to the appointment, rather than trying to judge the quality of the new CSO itself. If the announcement leads to a rise, it’s a good sign that there is more upside potential to come down the road as the leader begins to gain influence over the company.
Clashes between shareholders and management are never a good sign, but ending such a disagreement certainly is.
In October, activist investor group Starboard Value took a $1 billion stake in Pfizer stock, with the aim of pushing management to improve the company’s performance — or perhaps for the board of directors to choose a new CEO. No major changes have been announced so far, despite discussions between Starboard and management. The situation is ongoing and it is unlikely that Starboard will remain quiet if its demands are not met.
That opens the door to an ugly public feud that could escalate and damage Pfizer’s reputation. It could also mean the announcement of a new strategy that seeks to address the activist group’s concerns in a comprehensive way. Threading the needle will likely take some time, and some discussion between management, the board and the action group. But if it does materialize, it will be a positive catalyst for the stock, and it will likely have beneficial effects that will last for a while.
Management could extend one olive branch in particular, which would also have an immediate beneficial impact on shareholders, but that wouldn’t represent a major departure from Pfizer’s strategy. Starboard makes mistakes in the company’s budgeting and forecasting processes, suggesting they often result in missed revenue and profit estimates and underperform Wall Street analyst consensus estimates. Hiring an outside firm to renovate the financial business units related to forecasting and making projections wouldn’t be that difficult or expensive, and it could help put out guidance that shareholders can rely on a little more.
Attracting new senior management can also be a positive catalyst. For now, keep in mind that this issue could play out in a number of different ways, some of which are more favorable for the stock than others.
Consider the following before buying shares in Pfizer:
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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Pfizer. The Motley Fool recommends Amgen. The Motley Fool has a disclosure policy.
3 Potential Catalysts That Could Lift Pfizer Stock Before 2025 was originally published by The Motley Fool
