'We expect the Pfizer narrative to shift to benefits of its Covid-19 success in stepped up pipeline/portfolio investments,' BofA said.
Pharmaceutical giant Pfizer was upgraded to buy by Bank of America, while it downgraded biotechs Regeneron Pharmaceuticals to underperform and Amgen to neutral.
Pfizer was raised from neutral, Regeneron was downgraded from neutral, and Amgen was lowered from buy.
BofA lifted its Pfizer price target to $70 from $59, while cutting its Regeneron price target to $575 from $675 and its Amgen price target to $255 from $285.
BofA upgraded Pfizer based on “expectations of a dramatic rollout of Paxlovid (an oral Covid-19 therapy) in 2022 and significant investments in the pipeline,” wrote analyst Geoff Meacham.
“Since 2020, investors have focused squarely on Pfizer's success in battling Covid-19, namely through vaccines and now oral agents,” he said.
“However, in 2022 we expect the Pfizer narrative to shift to the benefits of its Covid-19 success in the form of stepped up pipeline/portfolio investments.
As for Regeneron, its stock “outperformed in 2021 based primarily on a spike in [Covid treatment] REGEN-COV revenues,” Meacham wrote. “Looking to 2022, however, the Covid-19 contribution should be minimal, which we think could change the narrative on shares.”
“In addition, while Eylea [a macular degeneration drug] and Dupixent [an eczema drug] should continue to grow in 2022, consensus expectations aren’t conservative with competitive headwinds on the horizon.”
When it comes to Amgen, “due to lingering Covid-19 headwinds and net pricing pressures, AMGN shares underwhelmed in 2021,” Meacham said.
“Looking to 2022, we'd argue that growth skepticism is likely to persist until Amgen demonstrates a clear return to strong, volume-driven revenue upside for a number of key franchises including Otezla,” which treats plaque psoriasis.
Pfizer closed higher 2.02% at $55.63, Regeneron closed lower 3.52% at $595.12; and Amgen closed lower 1.2% at $225.15 on Wednesday.