UBS bets on Pfizer shares, but not on Merck shares

Pharmaceutical companies Pfizer and Merck in the autumn developed effective pills against COVID-19. According to UBS, there is an obvious favorite in this pair..

UBS upgraded Pfizer's stock to Buy and revised its target price from 52 to 60 $. The rating of Merck shares was lowered by the investment bank to neutral, and changed the target for shares from 98 to 76 $.

"Pfizer Dominates COVID-19 Prevention and Treatment", UBS said.

The pharmaceutical company presented a pill for coronavirus in early November. According to preliminary data, the medicine reduces the risk of hospitalization or death by 89%. In the coming days, Pfizer will send the regulator expanded data from clinical trials for approval of the drug..

Earlier, the commission approved the use in emergency cases of the drug from Merck. The pharmaceutical company stated, that the drug reduces the risk of complications and death by 50%. And later it turned out: the effectiveness of the tablet is lower, Total 30%. The regulator has not yet made the final decision on the drug., because he doubts its safety and efficacy.

"Pfizer will take the main share of this market", — UBS believes. How calculated in the bank, sales of pills from Pfizer in 2022 will be at least $ 14 billion. Vaccine sales will also be strong.

According to the data for the third quarter, Pfizer's revenue increased by 134%, up to $24 billion. Of these, about half were coronavirus vaccines.. According to the forecasts of the company itself, in 2021, revenue will approximately double compared to last year, up to 81-82 billion dollars.

Profits from such windfall Pfizer could use to develop new drugs, buyback and dividends, which it increases 11 consecutive years. Compared to S&P 500 the company's dividend yield is not the lowest - 2,8 against 1,3%.

Pfizer shares hit a 1999 high in August - 47,5 $. Since the beginning of the year, securities have risen in price by 50%, to 55 $. Merck shares fell by 5%, to 73 $.