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Pfizer trades at pre-pandemic levels, frustrating investors

Yahoo Finance health care reporter Anjalee Khemlani analyzes shares of pharmaceutical giant Pfizer as the FDA issues its full approval of the COVID-19 treatment drug Paxlovid.

Video transcript

- Given the success of its vaccine and its antiviral medication Paxlovid you would think that Pfizer would be one of the big winners from the COVID-19 pandemic. But not so much. The stock is actually down 25% so far this year. Basically flat going back to the start of the pandemic. Yahoo Finance senior health reporter Anjalee Khemlani joining us now. And Anj, when you take a look at that under-performance there, why do you think that is, and what do you think investors should make of this?

ANJALEE KHEMLANI: Well, investors have had a pretty interesting look on this stock. And we've seen this pressure on Pfizer since the pandemic times, actually. You saw, even with the approval of its vaccines, it didn't skyrocket the way that you saw other of its competitors like Moderna and Eli Lilly with the monoclonal antibody.

We did see a note from Goldman Sachs after meeting with management saying, quote, "following the anticipated completion of the SGEN deal, repayment of the leverage taken on from the transaction is a top priority for the company. And then incremental share repurchases are also possible. Then management would look to increase the extent of capital they return to shareholders either through repurchases or greater dividend."

And that's something that investors have been waiting to hear. They've been waiting to hear how they're going to reallocate all of that unprecedented COVID windfall. We know that if you look at that historical data looking at that stock, it has been largely flat.

You've also seen analyst recommendations largely look-- or largely recommend holding the stock, which has been true for year over year since 2020. I took a look back all the way since then. And it's been a majority of investors saying, hold. Meanwhile, Pfizer has been frustrated about this.

I've had conversations with CEO Albert Bourla about this exact topic dating back to those first approvals of the vaccine. And he told me as recently as last month quote, "although I'm not happy, all we can do is to execute on our strategy so that investors will see that this is a good growth opportunity." Now we know that some of the pressures facing the company include loss of exclusivity.

Those patents expiring for more than a dozen of its products, but they also are looking to fill that pipeline with the RSV vaccine, with the acquisition from Seagen and a couple of other small acquisitions that have taken place. So all told, it's definitely something where it's just a wait-and-see for this stock. The company saying repeatedly that its stock has been undervalued, and investors are saying, well, we'll wait and find out.

- Angalee, you mentioned Paxlovid. It did get full FDA approval today. For Pfizer, specifically, what does this mean?

ANJALEE KHEMLANI: That's right. So now that it's fully approved, we know that this drug can be marketed as well. Up until this point, it was just available through the US government. This falls in line with what we know is expected for all COVID products if they do get to the approval line now that the public health emergency is over.

So that is a positive for the company, and still, the stock knot up on that, just tying back to the earlier commentary. So interesting but a really good positive for the company right now.

- Yeah. I mean, you mentioned accessibility now with the FDA stamp of approval there. What have we heard from Pfizer in the past about the reach they see with this particular drug?

ANJALEE KHEMLANI: Well, it is the only oral drug available. It's a five-course-- five pill course, and it is available for the most vulnerable, the elderly, as well as some younger individuals who are most likely to be exposed to COVID and have more negative reactions. So this helps to keep them out of the hospital.

So this accessibility now opens up availability in pharmacies and doctor's offices and the like. So it really gives it a broader range of patients. And this has been one of the problems of accessibility when the US government was in charge of distribution. So it's likely that we'll see some of that movement there.

- All right, Anj. Thanks.