It has been about a month since the last earnings report for Pfizer, Inc. (PFE Quick QuotePFE - Free Report) . Shares have added about 8.7% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Pfizer Fourth-Quarter Earnings Lag; Sales Top; 2017 Sales View Soft

Pfizer’s fourth-quarter adjusted earnings per share of $0.47 missed the Zacks Consensus Estimate of $0.50 by 6%.

Earnings also declined 11% year over year due to lower revenues and higher costs and taxes than year-ago quarter.

Foreign exchange negatively impacted fourth-quarter adjusted earnings by approximately $0.04 per share.

Pfizer posted revenues of $13.63 billion, slightly higher than the Zacks Consensus Estimate of $13.55 billion. However, revenues declined 3% from the year-ago period. Fewer selling days compared to the year-ago quarter hurt sales in the fourth quarter.

Sales in Detail

While currency movement impacted Pfizer’s fourth-quarter revenues by 2% ($228 million), operational declined 1% ($191 million).

Pfizer’s standalone business (excluding the impact of foreign exchange, and the legacy Hospira and Medivation operations) recorded revenues of $12.32 billion, down 2% year over year on an operational basis. Hospira contributed $1.17 billion to sales.

Lower sales of the Prevnar/Prevenar 13 vaccines franchise and loss of exclusivity for some products  offset strong performance of key products like Ibrance (breast cancer), Lyrica (neuropathic pain) and Xeljanz (rheumatoid arthritis).

International revenues declined 7% (4% on an operational basis) to $6.82 billion. Meanwhile, the U.S. revenues rose 1% to $6.81 billion.

Segment Discussion

From the second quarter of 2016, Pfizer has reorganized its reporting segments to Pfizer Innovative Health (IH) and Pfizer Essential Health (EH).

Pfizer IH sales grew 1% (up 2% operationally) from the year-ago period to $7.73 billion.

Pfizer IH revenues were driven by persistently strong momentum of Ibrance in the U.S., robust operational growth of Eliquis globally, and growth of Lyrica and Xeljanz primarily in the U.S. Also, revenues from the blockbuster prostate cancer drug Xtandi, added to Pfizer’s portfolio following the Sep 2016 Medivation acquisition, also propelled U.S. revenues. This was partially offset by continued decline in revenues from Prevnar 13 for adults in the U.S. and lower revenues of Enbrel (down 22%) in key European markets due to biosimilar competition. The 2015 expiration of the collaboration agreement to co-promote Rebif in the U.S. also hurt revenues.

Prevnar revenues tanked 33% in the U.S. due to “high initial capture rate” of the eligible adult patient population following Prevnar-13’s successful 2014 launch, which resulted in a smaller remaining “catch up” opportunity in the fourth quarter compared to the year-ago quarter. Meanwhile, the unfavorable timing of government purchases for the pediatric indication also hurt Prevnar sales. In 2017, the company expects global Prevnar 13 revenues to remain flat to slightly down with sales declining in the U.S.

While Consumer Healthcare revenues rose 2% to $950 million, Global Oncology revenues surged 46% to $1.36 billion driven by Xalkori and Ibrance. Ibrance received EU approval in Nov 2016 and will begin to launch across Europe in 2017. This should boost revenues further, primarily in the second half of the year.

Global Vaccine revenues declined 22% to $1.5 billion. While Internal Medicine rose 9% to $2.30 billion, the Inflammation & Immunology franchise declined 7% to $1.02 billion. Additionally, the portfolio of Rare Disease declined 7% to $602 million.

Pfizer EH segment sales recorded a decline of 8% (down 6% operationally) to $5.90 billion.

EH revenues were hurt by the loss of exclusivity and associated generic competition from products like Zyvox, Celebrex, Lyrica as well as lower revenues from legacy Hospira products.

Pfizer launched Inflectra, a biosimilar version of Remicade, in November last year. While Inflectra recorded sales of $4 million in the U.S. and $61 million globally, all other biosimilars brought in sales of $30 million (down 8%) from outside the U.S. markets.

Adjusted selling, informational and administrative (SI&A) expenses declined 4% during the quarter to $4.40 billion, while adjusted R&D expenses rose 8% to $2.51 billion, on the other.

2016 Results

Full-year sales rose 8% to $52.82 billion, falling short of the Zacks Consensus Estimate of $52.83 billion. However, sales were within the guidance range of $52 billion to $53 billion.

Adjusted earnings for 2016 were $2.40 per share, missing the Zacks Consensus Estimate of $2.41. Nevertheless, earnings were up 9% year over year. Earnings were within the guided range of $2.38–$2.43 per share.

The Hospira acquisition contributed $4.6 billion to revenues in 2016.

2017 Guidance

Pfizer’s 2017 sales outlook fell short of expectations. Revenues are expected in the range of $52 billion to $54 billion. This was lower than the then Zacks Consensus Estimate of $54.26 billion.

Adjusted earnings per share are expected in the range of $2.50–$2.60.

The sales guidance includes the negative impact of $0.9 billion from foreign exchange headwinds, $1.2 billion from the pending sale of the Hospira infusion systems business to medical device maker ICU Medical and $2.4 billion from loss of exclusivity on products. The adjusted EPS guidance includes the negative impact of product losses of exclusivity as well as currency headwinds.

At the mid-point of the ranges, revenues are expected to be slightly above 2016 level, while adjusted EPS is expected to increase 6%. Excluding negative impacts of the pending 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. In 2017, the company expects to buy-back shares worth $5 billion.

In 2017, Pfizer is expecting pivotal top-line study results in oncology and biosimilars.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

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 a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. 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 are looking for an inline return from the stock in the next few months.