Pfizer, vaccines and stocks

Equity investments are tricky. I'll discuss an interesting example that everyone will have an opinion about.

Let's take Pfizer, one of the few companies for whom COVID-19 was supposed to be an unalloyed bonanza. Even so, the company's stock is almost at a five-year low - just a bit above where it was in the pre-vaccine, early 2020 COVID-19 slump. If you had bought the stock five years ago and held on when the vaccine story started, you would now be sitting on a 20 per cent loss.

By any simple, straight-line analysis, this is a big puzzle - quite inexplicable. For 2021 and 2022, the company had a $70+ billion bump in revenue from the mRNA vaccine alone - a complete windfall. Sales of Paxlovid, its anti-COVID treatment, were about $18 billion in 2022. The rise in profits was just as impressive. From $12 billion in 2020, profits rose to $23 billion in 2021 and $38 billion in 2022.

So what happened? Why is the stock price now lower than it was five years ago? I can understand the stock price being lower than the vaccine bump of 2022 because expectations ran ahead of reality, but how could they be lower than five years ago? Is there a clue in the public space anywhere?

On social media, the general talk for many weeks now has been that Wall Street has realised that there is a serious prospect of ruinous product liabilities from the mRNA vaccine. Sure enough, something interesting is buried in the 2023 guidance Pfizer released just last week. Around 4,000 words deep in this 6,000-word document, Pfizer admits to a chance of heart disease (myocarditis) caused by the mRNA vaccine, especially amongst boys aged 12 to 17. Notably, this age group has practically zero risk from COVID-19, so the mRNA vaccines' net effect has been to raise the total mortality and disease risk of boys aged 12 to 17. Interestingly, the side-effect that Pfizer has admitted to has been widely noticed since the beginning but was just as widely condemned as 'misinformation' and a 'conspiracy theory'.

Moreover, even though Pfizer distributed this vaccine only where it obtained protection from product liability, this protection generally does not extend to any deliberate malpractice or fraud. Wall Street understands this very well. As I said upfront, equity investments are a tricky thing. The side effects of not understanding a business can be as harmful as the side effects of a medical treatment.

In general, the healthcare industry can be a minefield for investors. It's many industries wrapped in one label, and there is little in common between a hospital company (such as the one in our recommendations) and a generic drugs company like Pfizer. Moreover, the field is an ethical minefield. Many years ago, I had resolved never to recommend any healthcare business where an ethics-related issue was possibly cropping up.

However, my primary message today is not about healthcare per se but that equity research must be built upon a foundation of financial evaluation and a comprehensive study of the business domain. Without that, even if you invest, there is no confidence; without confidence, there's always the danger of overreactions to temporary problems. But, how many business domains can an individual investor understand enough to gain this confidence?

Enter Value Research Stock Advisor. It doesn't merely provide a roster of stocks to consider but also their underlying investment rationale. Beyond this, our researchers and analysts continually revisit and refresh the rationale. Subscribers receive the 'what' and the 'why.' Investing is a marathon, and you could use every assistance available. Here is where Value Research Stock Advisor steps in. We don't claim to make every decision for you — consider us your dedicated research team, aiming to empower you as an investor.

Let me recap what you get when you become a member:

• Access to all our (currently 52) stock picks
  
• Best Buy Stocks: 17 stocks selected from our recommendations. Use this set to start building your portfolio right away!
  
• The complete investment thesis for all recommended stocks so that you understand why you are investing
  
• New recommendations as soon as they are released
  
• Continuous updates and analysis on all recommended stocks straight from our dedicated analyst team
  
• Tools and data to research and analyse any other stock

Many investors make good choices, but in the ups and downs of the markets, they lose confidence and bail out too early. What we do is give you all the inputs you need for you to maintain the strength of your convictions. A key part of our job is to keep in touch and support you when things look shaky.

All things said and done, recommendations are just that - something that we recommend you do. A lot of people give recommendations. The real achievement of Value Research Stock Advisor is that all those members are becoming real investors.