Morgan Stanley sees a risk to Pfizer's EPS guidance

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By Sam Boughedda

In a note to clients Friday, Morgan Stanley analysts said the firm sees downside risk to Pfizer's (NYSE:PFE) EPS guidance.

The analysts explained that Pfizer will provide 1st time 2023 guidance in conjunction with fourth-quarter earnings on January 31 and the company previously noted that they plan to provide COVID franchise-level guidance (similar to 2022 practice).

In addition, Morgan Stanley raises its Paxlovid 2023 estimate for the new U.S. contract.

"At PFE's recent R&D day the company guided to 7-9% revenue growth for 2023, excluding COVID revenues and F/X. By our prior math this implies 2023 revenue for the base (ex-COVID) of ~$47.9bn-$48.8bn using the mid point of 2022 guidance of $44.75bn (excluding COVID revenues)," writes Flynn. "We model 2023 revenues (ex-COVID) of $45.1bn (4% YoY growth), but this includes an F/X headwind so it is not a clean comp to PFE's guide. PFE also noted that this year the average gross price increase across the portfolio was 3.7% vs. 2.7% last year, which was influenced by the current inflationary environment."

"We are raising our 2023 Paxlovid (oral COVID drug) estimate to $9.7bn from $7.7bn following the recently announced U.S. contract," the analysts added. "As a result our total 2023 revenue estimate goes to $71.1bn from $69.1bn (vs. consensus of $77.9bn) and our 2023 EPS goes to $4.16 from $3.90 (vs. consensus of $4.87)."