The global market study pneumococcal conjugate (PCV) market is ~$8 billion per year, and Vaxcyte Inc (NASDAQ:PCVX) estimates it will grow to ~$12 billion in the next few years.

The market is currently split into 25% adults / 75% infants. Needham writes that Vaxcyte's management expects this split to morph into 60% adults /40% infants over the next 3-5 years, with adults representing the bulk of the growth opportunity.

In the U.S., there's discussion about lowering the age for vaccinations to 50 and above, potentially doubling the adult market. With around 60 million adults aged 65 and above and approximately 120 million aged 50 and above, this shift could significantly impact the market.

Additionally, there's potential for the universal vaccination age to decrease, creating an opportunity for boosters in the adult market.

Merck & Co Inc's (NYSE:MRK) 15-valent (Vaxneuvance) and Pfizer Inc's (NYSE:PFE) 20-valent (Prevnar20) are the available pneumococcal conjugate vaccines (PCVs).

Needham maintains the Buy rating with a price target of $95.

Market adoption is driven by vaccine coverage, with Prevnar20 currently dominating with a 97% market share in adults due to its broader valency. Merck's 15-valent and Pfizer's 20-valent PCVs are accessible for infants, with Merck initially targeting this market.

However, Prevnar20 is expected to capture the majority of the infant market as well.

Needham highlights that Pfizer, Merck, and Sanofi SA (NASDAQ:SNY) are currently limited to the 20/21 conjugate level in their vaccine development. However, Vaxcyte stands out with the capability to reach up to 24 conjugates, leading to a stronger immune response.

Vaxcyte also has a 31-valent vaccine. Regarding Merck's V116, Vaxcyte predicts its approval but doubts it will receive the preferred ACIP recommendation.

Price Action: PCVX shares are down 4.03% at $61.91 on the last check Wednesday.

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