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Why Is Pfizer (PFE) Down 7.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Pfizer (PFE - Free Report) . Shares have lost about 7.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pfizer due for a breakout? 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 Lags Q4 Earnings & Sales Estimates
Fourth-quarter 2019 adjusted earnings per share of 55 cents missed the Zacks Consensus Estimate of 57 cents. Earnings declined 13% year over year due to lower revenues and higher operating costs.
Revenues of $12.69 billion also missed the Zacks Consensus Estimate of $12.70 billion. Revenues declined 9% from the year-ago quarter on a reported basis. On an operational basis, excluding the 1% negative impact of currency, revenues declined 8% year over year as higher sales of some key brands in Pfizer’s Biopharmaceuticals group was offset by revenue decline in the Upjohn segment. The segment was hurt mainly by the loss of Lyrica exclusivity in July 2019 in the United States.
Excluding the spin-off of the Consumer Healthcare unit, fourth-quarter revenues declined 1% operationally. Pfizer did not record any revenues from the Consumer Healthcare unit. Instead, it recorded its share of profits generated by the Consumer Healthcare JV.
International revenues declined 4% to $7.2 billion. On an operational basis, international sales declined 2% in the quarter. U.S. revenues declined 15% to $5.49 billion.
Adjusted selling, informational and administrative (SI&A) expenses rose 4% (operationally) in the quarter to $4.07 billion. Adjusted R&D expenses rose 4% to $2.53 billion.
Segment Discussion
Pfizer Biopharma sales grew 7% on a reported basis (up 9% an operational basis) from the year-ago period to $10.53 billion. Higher sales of brands like Eliquis, Ibrance, Inlyta, Xtandi and higher biosimilars revenues drove this segment’s sales growth. Weaker sales of Prevnar 13/Prevenar 13 in the United States and Enbrel internationally offset the increase. Also, pricing had a negative 2% impact on Biopharma's sales.
Within the Biopharma group, Oncology revenues increased 26% (on an operational basis) to $2.47 billion. Vaccine revenues rose 7% to $1.71 billion. Internal Medicine rose 2% to $2.37 billion. The Inflammation & Immunology franchise declined 2% to $1.25 billion. The portfolio of Rare Disease rose 25% to $686 million. The newly added Hospital sub-segment’s sales rose 3% to $2.06 billion.
Pfizer’s Upjohn group’s sales declined 32%, both on a reported and operational basis, to $2.16 billion mainly due to U.S. loss of exclusivity of Lyrica. Excluding the unfavorable impact of Lyrica in the United States and other recent product losses of exclusivity, Upjohn sales declined 3% operationally.
Performance of Key Drugs
Ibrance revenues rose 15% year over year to $1.28 billion on continued strong uptake in international markets and consistent CDK class market share growth in the United States. However, Ibrance revenues fell short of the Zacks Consensus Estimate of $1.36 billion.
Xeljanz sales rose 11% to $607 million driven mainly by growth in international markets. International sales rose 44% driven by continued uptake in the rheumatoid arthritis (RA) indication as well as from the recent launch of the ulcerative colitis (UC) indication in certain developed market. U.S. sales of Xeljanz rose 1% as higher volumes from the drug's 2018 launches for psoriatic arthritis and UC indications were offset by higher rebating from new commercial contracts.
In July 2019, Xeljanz’s prescribing information in the United States was updated by the FDA to include two additional boxed warnings for the RA indication as well as some label changes for the UC indication, following review of a post-marketing study. Regarding this update, Pfizer mentioned on the call that the label changes did not impact the drug’s prescription trends significantly in the quarter, both for the RA and UC indications.
Inlyta revenues increased 72% to $161 million, driven mainly by 249% growth in the United States. U.S. sales gained from increased uptake resulting from recent FDA approvals for the combination of Inlyta plus Bavencio and Inlyta plus Keytruda in first-line treatment of advanced renal cell carcinoma patients.
Global Prevnar 13/Prevenar 13 revenues rose 6% to $1.58 billion. Prevnar 13 revenues declined 7% in the United States, reflecting continued decline in revenues for the adult indication. Prevenar 13 revenues rose 18% in international markets.
Enbrel revenues declined 18% to $414 million in key European markets due to continued biosimilar competition.
Eliquis alliance revenues and direct sales rose 22% to $1.1 billion driven by continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains. Xalkori sales rose 39% to $145 million. Xtandi recorded alliance revenues of $244 million in the quarter, up 29% year over year. Sutent sales declined 10% to $231 million. Chantix sales declined 4% to $282 million in the quarter.
Importantly, new drug Vyndaqel/Vyndamax recorded sales of $213 million in the quarter compared with $156 million in the previous quarter.
Braftovi plus Mektovi, which Pfizer acquired following its acquisition of Array BioPharma, recorded sales of $30 million each in the fourth quarter.
Total biosimilar revenues were $279 million, up 35% year over year. Inflectra/ Remsima recorded sales of $179 million globally, up 5% year over year. New biosimilar product, Retacrit, a biosimilar of Epogen and Procrit, is off to a good start in the United States, recording $79 million of revenues in the fourth quarter versus $64 million in the third quarter. Pfizer expects an additional contribution from biosimilars in 2020 with the launch of Zirabev, Ruxience and Trazimera in the year.
In sterile injectables, global revenues increased 5% operationally to $1.33 billion and U.S. revenues increased 8% operationally as Pfizer’s manufacturing recovery efforts started taking shape. Pfizer expects expect continued improvement throughout 2020.
In the Upjohn segment, sales of key drug Lyrica declined 68% to $433 million due to multi-source generic erosion. Viagra sales declined 5% to $119 million due to generic competition.
2019 Results
Full-year 2019 sales declined 4% to $51.75 billion, missing the Zacks Consensus Estimate of $51.81 billion. However, sales were within the guided range of $51.2 billion to $52.2 billion.
Adjusted earnings for 2019 of $2.95 per share were below the Zacks Consensus Estimate of $2.96. Earnings however rose 1% year over year. Earnings were within the guided range of $2.94-$3.00.
Excluding $2.1 billion in revenues generated from the Consumer Healthcare business segment, total revenues were $49.7 billion and adjusted diluted EPS was $2.95 in 2019.
2020 Guidance
The company issued its financial guidance for 2020 for the present Pfizer as well as for the “New Pfizer”, after the Upjohn divesture.
Revenues are expected in the range of $48.5 billion to $50.5 billion, the midpoint of which indicates a decline from 2019 levels due to lost revenue contribution from CHC unit. Unfavorable impact of currency is expected to hurt 2020 revenues by $200 million. The midpoint of the 2020 revenue guidance indicates no change from 2019 levels, excluding Consumer Healthcare and currency headwinds.
Adjusted earnings per share are expected in the range of $2.82-$2.92.
Research and development expense for present Pfizer is expected in the range of $8.1- $8.5 billion while SI&A spending is projected in the range of $12.0–$13.0 billion. Adjusted tax rate is expected to be approximately 15% in 2020.
The above guidance takes into account a full year of revenue and expense contributions from Biopharma and Upjohn.
The “New Pfizer” is expected to record revenues in the range of $40.7 billion to $42.3 billion, the midpoint of which indicates 8% volume-driven operational growth compared to 2019 Biopharma revenues. Adjusted EPS guidance for the “New Pfizer” is in the range of $2.25-$2.35. Pfizer’s Biopharma unit will become the “New Pfizer” following the expected separation of Upjohn.
In 2020, Pfizer expects strong growth of key brands like Ibrance, Xeljanz and Eliquis to continue to drive sales. In addition, new brands such as Vyndaqel/Vyndamax, Braftovi, Mektovi and oncology biosimilars should bring in additional sales.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
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Why Is Pfizer (PFE) Down 7.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Pfizer (PFE - Free Report) . Shares have lost about 7.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pfizer due for a breakout? 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 Lags Q4 Earnings & Sales Estimates
Fourth-quarter 2019 adjusted earnings per share of 55 cents missed the Zacks Consensus Estimate of 57 cents. Earnings declined 13% year over year due to lower revenues and higher operating costs.
Revenues of $12.69 billion also missed the Zacks Consensus Estimate of $12.70 billion. Revenues declined 9% from the year-ago quarter on a reported basis. On an operational basis, excluding the 1% negative impact of currency, revenues declined 8% year over year as higher sales of some key brands in Pfizer’s Biopharmaceuticals group was offset by revenue decline in the Upjohn segment. The segment was hurt mainly by the loss of Lyrica exclusivity in July 2019 in the United States.
Excluding the spin-off of the Consumer Healthcare unit, fourth-quarter revenues declined 1% operationally. Pfizer did not record any revenues from the Consumer Healthcare unit. Instead, it recorded its share of profits generated by the Consumer Healthcare JV.
International revenues declined 4% to $7.2 billion. On an operational basis, international sales declined 2% in the quarter. U.S. revenues declined 15% to $5.49 billion.
Adjusted selling, informational and administrative (SI&A) expenses rose 4% (operationally) in the quarter to $4.07 billion. Adjusted R&D expenses rose 4% to $2.53 billion.
Segment Discussion
Pfizer Biopharma sales grew 7% on a reported basis (up 9% an operational basis) from the year-ago period to $10.53 billion. Higher sales of brands like Eliquis, Ibrance, Inlyta, Xtandi and higher biosimilars revenues drove this segment’s sales growth. Weaker sales of Prevnar 13/Prevenar 13 in the United States and Enbrel internationally offset the increase. Also, pricing had a negative 2% impact on Biopharma's sales.
Within the Biopharma group, Oncology revenues increased 26% (on an operational basis) to $2.47 billion. Vaccine revenues rose 7% to $1.71 billion. Internal Medicine rose 2% to $2.37 billion. The Inflammation & Immunology franchise declined 2% to $1.25 billion. The portfolio of Rare Disease rose 25% to $686 million. The newly added Hospital sub-segment’s sales rose 3% to $2.06 billion.
Pfizer’s Upjohn group’s sales declined 32%, both on a reported and operational basis, to $2.16 billion mainly due to U.S. loss of exclusivity of Lyrica. Excluding the unfavorable impact of Lyrica in the United States and other recent product losses of exclusivity, Upjohn sales declined 3% operationally.
Performance of Key Drugs
Ibrance revenues rose 15% year over year to $1.28 billion on continued strong uptake in international markets and consistent CDK class market share growth in the United States. However, Ibrance revenues fell short of the Zacks Consensus Estimate of $1.36 billion.
Xeljanz sales rose 11% to $607 million driven mainly by growth in international markets. International sales rose 44% driven by continued uptake in the rheumatoid arthritis (RA) indication as well as from the recent launch of the ulcerative colitis (UC) indication in certain developed market. U.S. sales of Xeljanz rose 1% as higher volumes from the drug's 2018 launches for psoriatic arthritis and UC indications were offset by higher rebating from new commercial contracts.
In July 2019, Xeljanz’s prescribing information in the United States was updated by the FDA to include two additional boxed warnings for the RA indication as well as some label changes for the UC indication, following review of a post-marketing study. Regarding this update, Pfizer mentioned on the call that the label changes did not impact the drug’s prescription trends significantly in the quarter, both for the RA and UC indications.
Inlyta revenues increased 72% to $161 million, driven mainly by 249% growth in the United States. U.S. sales gained from increased uptake resulting from recent FDA approvals for the combination of Inlyta plus Bavencio and Inlyta plus Keytruda in first-line treatment of advanced renal cell carcinoma patients.
Global Prevnar 13/Prevenar 13 revenues rose 6% to $1.58 billion. Prevnar 13 revenues declined 7% in the United States, reflecting continued decline in revenues for the adult indication. Prevenar 13 revenues rose 18% in international markets.
Enbrel revenues declined 18% to $414 million in key European markets due to continued biosimilar competition.
Eliquis alliance revenues and direct sales rose 22% to $1.1 billion driven by continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains. Xalkori sales rose 39% to $145 million. Xtandi recorded alliance revenues of $244 million in the quarter, up 29% year over year. Sutent sales declined 10% to $231 million. Chantix sales declined 4% to $282 million in the quarter.
Importantly, new drug Vyndaqel/Vyndamax recorded sales of $213 million in the quarter compared with $156 million in the previous quarter.
Braftovi plus Mektovi, which Pfizer acquired following its acquisition of Array BioPharma, recorded sales of $30 million each in the fourth quarter.
Total biosimilar revenues were $279 million, up 35% year over year. Inflectra/ Remsima recorded sales of $179 million globally, up 5% year over year. New biosimilar product, Retacrit, a biosimilar of Epogen and Procrit, is off to a good start in the United States, recording $79 million of revenues in the fourth quarter versus $64 million in the third quarter. Pfizer expects an additional contribution from biosimilars in 2020 with the launch of Zirabev, Ruxience and Trazimera in the year.
In sterile injectables, global revenues increased 5% operationally to $1.33 billion and U.S. revenues increased 8% operationally as Pfizer’s manufacturing recovery efforts started taking shape. Pfizer expects expect continued improvement throughout 2020.
In the Upjohn segment, sales of key drug Lyrica declined 68% to $433 million due to multi-source generic erosion. Viagra sales declined 5% to $119 million due to generic competition.
2019 Results
Full-year 2019 sales declined 4% to $51.75 billion, missing the Zacks Consensus Estimate of $51.81 billion. However, sales were within the guided range of $51.2 billion to $52.2 billion.
Adjusted earnings for 2019 of $2.95 per share were below the Zacks Consensus Estimate of $2.96. Earnings however rose 1% year over year. Earnings were within the guided range of $2.94-$3.00.
Excluding $2.1 billion in revenues generated from the Consumer Healthcare business segment, total revenues were $49.7 billion and adjusted diluted EPS was $2.95 in 2019.
2020 Guidance
The company issued its financial guidance for 2020 for the present Pfizer as well as for the “New Pfizer”, after the Upjohn divesture.
Revenues are expected in the range of $48.5 billion to $50.5 billion, the midpoint of which indicates a decline from 2019 levels due to lost revenue contribution from CHC unit. Unfavorable impact of currency is expected to hurt 2020 revenues by $200 million. The midpoint of the 2020 revenue guidance indicates no change from 2019 levels, excluding Consumer Healthcare and currency headwinds.
Adjusted earnings per share are expected in the range of $2.82-$2.92.
Research and development expense for present Pfizer is expected in the range of $8.1- $8.5 billion while SI&A spending is projected in the range of $12.0–$13.0 billion. Adjusted tax rate is expected to be approximately 15% in 2020.
The above guidance takes into account a full year of revenue and expense contributions from Biopharma and Upjohn.
The “New Pfizer” is expected to record revenues in the range of $40.7 billion to $42.3 billion, the midpoint of which indicates 8% volume-driven operational growth compared to 2019 Biopharma revenues. Adjusted EPS guidance for the “New Pfizer” is in the range of $2.25-$2.35. Pfizer’s Biopharma unit will become the “New Pfizer” following the expected separation of Upjohn.
In 2020, Pfizer expects strong growth of key brands like Ibrance, Xeljanz and Eliquis to continue to drive sales. In addition, new brands such as Vyndaqel/Vyndamax, Braftovi, Mektovi and oncology biosimilars should bring in additional sales.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.