Bank of America Global Research (BAC) released their stock ratings and price targets for 15 biopharmaceutical companies as part of their recent report titled “4Q21 Biopharma Preview – What We Think Will Matter.” Of these 15, BofA cited Pfizer (PFE) and BioMarin (BMRN) as being positioned particularly strongly this earnings season.
“As is typical, Biopharma’s 4Q is more about assessing sector tone and the 2022 outlook vs. 4Q performance,” the report reads. “We like PFE and BMRN going into earnings season.”
Recently, the biotech and pharma industries have been undergoing a reckoning amid the broader market downturn — an idea echoed by BioMarin CEO JJ Bienaimé himself. Even big names like Moderna (MRNA) have seen stock price corrections of as much as 65% over the last six months.
As for Moderna, BofA believes that its current valuation assumptions justify its market cap, which was not the case several months earlier when its stock narrative may have been inflating it. Bienaimé said the same phenomenon is likely occurring with smaller, more speculative biotech companies funded by venture capitalists as well.
In any case, BofA pointed to Pfizer and BioMarin as being two companies that stand above the competition in terms of their outlooks for the coming earnings season and beyond.
Pfizer’s bullish sales outlook
BofA currently rates Pfizer at Buy with a $70 price target. The stock is currently trading slightly above $50, having come down from a late December high of nearly $60. BofA anticipates the major focus for the stock to be sales pertaining to Pfizer’s COVID-related products.
“We continue to anticipate the major focus to be COVID sales, now with focus on Paxlovid guidance on top of a vaccine contracts update, particularly as FY22 consensus estimates have risen starkly…” the report reads. “Our forecasts for the vaccine are just ahead of Consensus for 4Q ($12.8B, +$314M), but we see a sequential decline coming as production remains on pace, but there is likely a higher share of vaccines going to lower income/price countries.”
With a market cap of almost $300 billion, Pfizer still reigns among the largest pharmaceutical companies in the world. Going forward in 2022, BofA analysts expect some uncertainties for Pfizer surrounding its mergers and acquisitions strategy and are awaiting updates surrounding its gene pipeline programs. Nevertheless, BofA expects “robust cash generation in the next few years.”
Pfizer is expected to report Q4 earnings on Feb. 8 before market open.
BioMarin could beat expectations
BofA currently rates BioMarin a Buy with a $120 price target. The stock’s price has fluctuated greatly over the past year, teetering between $70 and $90. While a small company in comparison to Pfizer at a $15.9 billion market cap, BofA believes BioMarin could top expectations despite difficult-to-predict quarterly results due to its commercial business relying heavily on government orders.
“That said, we think BioMarin could be positioned to report better than expected results for both the top- ($1,854M vs. $1,840M cons) and bottom-lines ($1.45 vs. $1.27 cons) given prior guidance, recovering [Phenylketonuria] business, and contributions from the Voxzogo launch,” the report reads.
The report noted that 2022 guidance may set the stage for BioMarin’s evolving business including expectations for the Voxzogo injection to treat dwarfism in children as well as approval of Roctavian, an experimental gene therapy treatment.
“We think this new product cycle should help drive a stronger than expected 2022 (revenues/EPS: $2.33B/ $2.30 vs.$2.06B/ $1.96 cons) and help smooth out BioMarin’s quarter-to-quarter results,” the report reads.
BioMarin is expected to report Q4 earnings on Feb. 24 after market close.
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV