Pfizer beats 1Q profit forecasts, but sales dip misses views

Pablo Tucker
May 3, 2017

That transaction completed on February 3, 2017. With this in mind, instead of another run-down of the high number of companies reporting today, I'd like to focus on one company having reported before the bell and one coming after the close: Pfizer (PFE - Free Report) and Apple (AAPL - Free Report). The company expects a negative impact of about 1.5% from currency headwinds on both earnings and revenue. The company continues to be hurt by declining sales for its Prevnar 13 vaccine, legacy established products, and peri-LOE products (which will have or will soon face loss of exclusivity).

This is the first quarter in the last three where Pfizer has actually beaten projections.

Pfizer reported adjusted first-quarter earnings per share of 69 cents, modestly ahead of the FactSet consensus of 67 cents and up 3% from the same period a year ago.

Merck's GAAP earnings per share rose to 56 cents from 40 cents per share in last year's first quarter. The biopharmaceutical company reported $0.47 EPS for the quarter, missing analysts' consensus estimates of $0.50 by $0.03.

When revenue drops but earnings rise, it means that costs went down.

As seen on the chart below, Pfizer Inc, entered 2017 steady and showed signs of regaining the momentum from the fall at the end of the December quarter. Following the release, the stock was initially down 0.4% at $33.64 in early trading indications Tuesday. While Pfizer has since made some deals - including the $14 billion purchase of cancer drug maker Medivation - it hasn't been enough so far to reverse the slowdown in older drugs. Chairman and Chief Executive Officer Ian Read indicated in his statement during the fourth quarter call in 2016 that they are positioned for a strong performance in 2017. Better days could lie ahead, though.

Late a year ago, Pfizer introduced Inflectra, a so-called biosimilar, or cheaper copy of a biologic drug, to compete against Johnson & Johnson's rheumatoid arthritis treatment Remicade. On average, equities analysts anticipate that Pfizer Inc. will post $2.55 EPS for the current fiscal year. Sales for blood thinner Eliquis jumped 51%.

Pfizer also has recently launched a couple of new products that should be big winners.

First-quarter Essential Health revenues declined 9% operationally, primarily resulting from a 23% operational decline from Peri-LOE Products, including Pristiq in the US, which lost marketing exclusivity in the March 2017, Lyrica in most developed Europe markets and Zyvox in developed Europe and in the USA, a 68% decline in HIS revenues, reflecting its February 3, 2017 divestiture, and a 5% operational decline from Legacy Established Products. Bavencio obtained approval in March for treating Merkel cell carcinoma (MCC), a rare form of skin cancer. Institutional investors and hedge funds own 69.53% of the company's stock. AT Bancorp raised its stake in shares of Pfizer by 212.3% in the third quarter. This represents a $1.28 annualized dividend and a dividend yield of 3.77%. That amount is only 61% of the net income reported by the company in the period.

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