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We expect Pfizer (PFE - Analyst Report) to report in line first-quarter 2013 results before the opening bell on Apr 30, 2013.

Factors at Play for 1Q

We expect Pfizer to struggle to post meaningful top-line growth going forward. The company has entered a challenging operating period with the loss of patent exclusivity on Lipitor, Norvasc, Protonix, Camptosar and Zoloft. These products are all facing declining sales due to generic competition. In 2013, revenues will be hit by about $4 billion due to genericization and the expiration of a few co-promotion agreements.

While near-term earnings will be driven by cost cutting efforts and share repurchases, longer-term growth will depend on the success of drug development.

The efforts of Pfizer notwithstanding, first-quarter 2013 results will likely continue to be hurt by the genericization. Pfizer spun off its Animal Health business in Feb 2013, in order to streamline its operations. The spun off entity is currently trading on the New York Stock Exchange as Zoetis Inc. (ZTS - Analyst Report). We note that the Animal Health business generated sales of $1.2 billion in the fourth quarter of 2012 accounting for 7.8% of total revenues.

Pfizer has delivered positive earnings surprises in the last four quarters with an average beat of 6.26%.

Earnings Whispers?

Our proven model does not conclusively show that Pfizer is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 for this to happen.

Zacks ESP: The ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and Zacks Consensus Estimate currently stand at 55 cents.

Zacks Rank #3 (Hold): Pfizer’s Zacks Rank #3 lowers the predictive power of ESP because the Zacks Rank #3 when combined with an ESP of 0.00% indicates the possibility of in line results.

Stocks to Consider

Here are some other stocks you may want to consider as our model shows these have the right combination of elements to post an earnings beat this season:

Merck & Co. Inc. (MRK - Analyst Report) has an earnings ESP of +1.28% and holds a Zacks Rank #3.

VIVUS Inc. (VVUS - Snapshot Report) has an earnings ESP of +7.84% and holds a Zacks Rank #3.

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