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Pfizer (PFE) Down 2.5% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Pfizer, Inc. (PFE - Free Report) . Shares have lost about 2.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Pfizer First Quarter Earnings Beat; Sales Miss; 2017 View Intact
Pfizer’s first quarter adjusted earnings per share of $0.69 beat the Zacks Consensus Estimate of $0.67 by 3%.
Earnings also rose 3% year over year as lower costs offset a soft top-line performance. Lower taxes and share count also pulled up the bottom-line. Foreign exchange had a neutral impact on adjusted earnings while fewer shares outstanding benefitted adjusted earnings by approximately $0.15 per share.
Pfizer posted revenues of $12.78 billion, which fell short of the Zacks Consensus Estimate of $13.04 billion. Again, revenues declined 2% from the year-ago period. Fewer selling days compared with the year-ago quarter hurt sales by $300 million in the first quarter. Also divestiture of Hospira Infusion Systems hurt sales in the quarter.
Sales in Detail
While currency movement impacted Pfizer’s first-quarter revenues by 1% ($116 million), operational decline was 1% ($110 million).
In Feb 2017, Pfizer sold its Hospira Infusion Systems (HIS) business to ICU Medical for up to approximately $900 million. Excluding HIS revenues, sales rose 1% on an operational basis.
Lower sales of Enbrel and the Prevnar/Prevenar 13 vaccines franchise along with loss of exclusivity for some products offset a strong performance of key products like Ibrance (breast cancer), Lyrica (neuropathic pain) and Xeljanz (rheumatoid arthritis).
International revenues declined 3% (1% on an operational basis) to $6.14 billion, while the U.S. revenues were flat at $6.64 billion.
Segment Discussion
From the second quarter of 2016, Pfizer reorganized its reporting segments to Pfizer Innovative Health (IH) and Pfizer Essential Health (EH).
Pfizer IH sales grew 5% (up 6% operationally) from the year-ago period to $7.42 billion.
Pfizer IH revenues were driven by a persistently strong momentum of Ibrance and Eliquis globally along with the growth of Lyrica and Xeljanz, primarily in the U.S. While Lyrica sales rose 12% to $1.13 billion and Xeljanz rose 27% to $250 million.
Revenues from Xtandi, added to Pfizer’s portfolio following the Sep 2016 Medivation acquisition, also propelled the U.S. revenues. Xtandi recorded alliance revenues of $131 million in the quarter.
This was partially offset by a continued decline in revenues from Prevnar 13 in both the U.S. and international markets, lower revenues of Enbrel in key European markets and lower sales of Viagra in the U.S. due to its lower demand.
Global Prevnar 13/Prevenar 13 revenues declined 7% operationally. Prevnar revenues tanked 9% in the U.S. due to “high initial capture rate” of the eligible adult patient population following Prevnar-13’s successful 2014 launch. This resulted in a smaller remaining “catch up” opportunity in the first quarter compared to the year-ago quarter.
Enbrel (outside the U.S. and Canada) revenues declined 20% due to biosimilar competition in most developed European markets.
While Consumer Healthcare revenues rose 3% to $848 million, Global Oncology revenues surged 35% to $1.35 billion, driven by Ibrance. Ibrance revenues rose 58% to $679 million in the quarter.
Global Vaccine revenues declined 7% to $1.47 billion, Inflammation & Immunology franchise 8% to $871 million and the portfolio of Rare Disease decreased 11% to $507 million, respectively. Internal Medicine rose 12% to $2.38 billion.
Pfizer EH segment sales recorded a sharp decline of 10% (down 9% operationally) to $5.36 billion. Excluding HIS revenues, EH sales declined 6%.
EH revenues were hurt by the loss of exclusivity and associated generic competition for products like Pristiq (generic versions launched in the U.S. in March 2017), Zyvox, Celebrex, Lyrica; lower revenues from legacy Hospira products and a decline in HIS revenues. In the EH business, the sterile injectables portfolio and biosimilars did well in the quarter.
Pfizer launched Inflectra, a biosimilar version of blockbuster RA drug Remicade, in November last year. While Inflectra recorded sales of $17 million in the U.S. and $78 million globally, all other biosimilars brought in sales of $27 million (down 12%) from outside the U.S. markets.
Adjusted selling, informational and administrative (SI&A) expenses declined 2% during the quarter to $3.29 billion. Adjusted R&D expenses declined 1% to $1.70 billion.
2017 Guidance
Pfizer re-affirmed its guidance for 2017. Revenues are expected in the range of $52 billion to $54 billion.
Adjusted earnings per share are expected in the range of $2.50–$2.60.
At the mid-point, revenues are expected to be slightly above 2016 level, while adjusted EPS is expected to increase 6%. Excluding negative impacts of the disposition of HIS and foreign exchange, revenues and earnings are expected to record operational growth of 4% and 10%, respectively.
R&D expenses are expected in the range of $7.5–$8.0 billion, while SI&A spending is projected in the range of $13.7–$14.7 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
At this time, Pfizer's stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with an 'D'. The stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Pfizer (PFE) Down 2.5% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Pfizer, Inc. (PFE - Free Report) . Shares have lost about 2.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Pfizer First Quarter Earnings Beat; Sales Miss; 2017 View Intact
Pfizer’s first quarter adjusted earnings per share of $0.69 beat the Zacks Consensus Estimate of $0.67 by 3%.
Earnings also rose 3% year over year as lower costs offset a soft top-line performance. Lower taxes and share count also pulled up the bottom-line. Foreign exchange had a neutral impact on adjusted earnings while fewer shares outstanding benefitted adjusted earnings by approximately $0.15 per share.
Pfizer posted revenues of $12.78 billion, which fell short of the Zacks Consensus Estimate of $13.04 billion. Again, revenues declined 2% from the year-ago period. Fewer selling days compared with the year-ago quarter hurt sales by $300 million in the first quarter. Also divestiture of Hospira Infusion Systems hurt sales in the quarter.
Sales in Detail
While currency movement impacted Pfizer’s first-quarter revenues by 1% ($116 million), operational decline was 1% ($110 million).
In Feb 2017, Pfizer sold its Hospira Infusion Systems (HIS) business to ICU Medical for up to approximately $900 million. Excluding HIS revenues, sales rose 1% on an operational basis.
Lower sales of Enbrel and the Prevnar/Prevenar 13 vaccines franchise along with loss of exclusivity for some products offset a strong performance of key products like Ibrance (breast cancer), Lyrica (neuropathic pain) and Xeljanz (rheumatoid arthritis).
International revenues declined 3% (1% on an operational basis) to $6.14 billion, while the U.S. revenues were flat at $6.64 billion.
Segment Discussion
From the second quarter of 2016, Pfizer reorganized its reporting segments to Pfizer Innovative Health (IH) and Pfizer Essential Health (EH).
Pfizer IH sales grew 5% (up 6% operationally) from the year-ago period to $7.42 billion.
Pfizer IH revenues were driven by a persistently strong momentum of Ibrance and Eliquis globally along with the growth of Lyrica and Xeljanz, primarily in the U.S. While Lyrica sales rose 12% to $1.13 billion and Xeljanz rose 27% to $250 million.
Revenues from Xtandi, added to Pfizer’s portfolio following the Sep 2016 Medivation acquisition, also propelled the U.S. revenues. Xtandi recorded alliance revenues of $131 million in the quarter.
This was partially offset by a continued decline in revenues from Prevnar 13 in both the U.S. and international markets, lower revenues of Enbrel in key European markets and lower sales of Viagra in the U.S. due to its lower demand.
Global Prevnar 13/Prevenar 13 revenues declined 7% operationally. Prevnar revenues tanked 9% in the U.S. due to “high initial capture rate” of the eligible adult patient population following Prevnar-13’s successful 2014 launch. This resulted in a smaller remaining “catch up” opportunity in the first quarter compared to the year-ago quarter.
Enbrel (outside the U.S. and Canada) revenues declined 20% due to biosimilar competition in most developed European markets.
While Consumer Healthcare revenues rose 3% to $848 million, Global Oncology revenues surged 35% to $1.35 billion, driven by Ibrance. Ibrance revenues rose 58% to $679 million in the quarter.
Global Vaccine revenues declined 7% to $1.47 billion, Inflammation & Immunology franchise 8% to $871 million and the portfolio of Rare Disease decreased 11% to $507 million, respectively. Internal Medicine rose 12% to $2.38 billion.
Pfizer EH segment sales recorded a sharp decline of 10% (down 9% operationally) to $5.36 billion. Excluding HIS revenues, EH sales declined 6%.
EH revenues were hurt by the loss of exclusivity and associated generic competition for products like Pristiq (generic versions launched in the U.S. in March 2017), Zyvox, Celebrex, Lyrica; lower revenues from legacy Hospira products and a decline in HIS revenues. In the EH business, the sterile injectables portfolio and biosimilars did well in the quarter.
Pfizer launched Inflectra, a biosimilar version of blockbuster RA drug Remicade, in November last year. While Inflectra recorded sales of $17 million in the U.S. and $78 million globally, all other biosimilars brought in sales of $27 million (down 12%) from outside the U.S. markets.
Adjusted selling, informational and administrative (SI&A) expenses declined 2% during the quarter to $3.29 billion. Adjusted R&D expenses declined 1% to $1.70 billion.
2017 Guidance
Pfizer re-affirmed its guidance for 2017. Revenues are expected in the range of $52 billion to $54 billion.
Adjusted earnings per share are expected in the range of $2.50–$2.60.
At the mid-point, revenues are expected to be slightly above 2016 level, while adjusted EPS is expected to increase 6%. Excluding negative impacts of the disposition of HIS and foreign exchange, revenues and earnings are expected to record operational growth of 4% and 10%, respectively.
R&D expenses are expected in the range of $7.5–$8.0 billion, while SI&A spending is projected in the range of $13.7–$14.7 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
Pfizer, Inc. Price and Consensus
Pfizer, Inc. Price and Consensus | Pfizer, Inc. Quote
VGM Scores
At this time, Pfizer's stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with an 'D'. The stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.