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Pfizer (PFE) Q2 Earnings Beat, View Up on COVID-19 Vaccine

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Pfizer, Inc. (PFE - Free Report) reported second-quarter 2021 adjusted earnings per share of $1.07, which comprehensively beat the Zacks Consensus Estimate of 97 cents. Earnings rose 73% year over year.

Revenues came in at $18.98 billion, which beat the Zacks Consensus Estimate of $17.54 billion. Sales rose 92% from the year-ago quarter on a reported basis and 86% on an operational basis, mainly driven by sales of Pfizer and partner BioNTech’s (BNTX - Free Report) COVID-19 vaccine, BNT162b2. The vaccine contributed $7.8 billion in global sales in the quarter. Excluding revenues from BNT162b2, sales grew 10% operationally.

Higher sales of brands like Eliquis, Vyndaqel/Vyndamax, Inlyta, Xtandi, recovery in sales of Prevnar 13 in the United States and Ibrance outside the United States, and higher biosimilars revenues drove sales growth. Weaker sales of Xeljanz, Ibrance and Chantix in the United States and Enbrel internationally partially offset the increase.

International revenues rose significantly to $11.4 billion. U.S. revenues rose 48% to $7.6 billion.

Adjusted selling, informational and administrative (SI&A) expenses rose 8% (operationally) in the quarter to $2.79 billion. Adjusted R&D expenses rose 22% to $2.27 billion due to costs related to development of COVID-19 vaccines and other medicines.

Segment Discussion

Oncology revenues increased 16% (on an operational basis) to $3.15 billion. Vaccine revenues were $9.23 billion compared with $1.25 billion in the year-ago quarter. Internal Medicine rose 2% to $2.4 billion. The Inflammation & Immunology franchise declined 12% to $1.04 billion. The portfolio of Rare Disease rose 28% to $895 million. Hospital sub-segment’s sales rose 17% to $2.26 billion.

Alliance revenues from Bristol-Myers (BMY - Free Report) for Eliquis and direct sales rose 13% to $1.48 billion driven by continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains.

Xtandi recorded alliance revenues of $303 million in the quarter, up 14% year over year.

Inlyta revenues were $257 million in the quarter, up 29%, driven mainly by growth in the United States and developed Europe due to combination use of Inlyta for the first-line treatment of advanced renal cell carcinoma patients

New rare disease drug Vyndaqel/Vyndamax recorded sales of $501 million in the quarter, up 77% year over year.

Total biosimilar revenues were $559 million, up 88% year over year driven by new oncology biosimilars (Trazimera, Zirabev and Ruxience) as well as continued growth from Retacrit (a biosimilar of Epogen and Procrit) in the United States

Sterile injectables global revenues rose 8% operationally to $1.38 billion.

Ibrance revenues rose 2% year over year to $1.40 billion as recovery in diagnosis rates and treatment initiations in outside U.S. markets increased demand. However, sales continued to decline in the United States due to increase in proportion of patients using Pfizer’s Patient Assistance Program (provides Ibrance free of charge to certain low-income patients) due to COVID-related economic hardships

Global Prevnar 13/Prevenar 13 revenues rose 9% to $1.24. Prevnar 13 revenues rose 34% in the United States due to growth in the pediatric and adult indications gaining from recovery in healthcare activity and wellness visits, which were hurt significantly by the pandemic in the previous quarters. Prevenar 13 revenues declined 9% in international markets.

Xeljanz sales declined 9% to $586 million due to unfavorable change in channel mix and lower new patient starts due to the FDA’s ongoing review of Pfizer’s post-marketing study, ORAL Surveillance, on Xeljanz in patients with rheumatoid arthritis. We remind investors that in February, the FDA issued a statement that Xeljanz may increase the risk of heart-related problems and cancer

Enbrel revenues declined 19% to $286 million due to continued biosimilar competition in key European markets and Japan. Pfizer has exclusive rights to Amgen’s (AMGN - Free Report) blockbuster RA drug, Enbrel, outside the United States and Canada.

Sutent sales declined 10% to $194 million. Chantix sales declined 23% to $184 million in the quarter.

2021 Guidance Raised

Pfizer raised its previously issued sales and earnings guidance for 2021.

Revenues are expected in the range of $78.0 billion to $80.0 billion compared with $70.5 billion to $72.5 billion previously. The mid-point of the revenue guidance indicates growth of 89% from 2020 levels compared with 71% previously.

The revenue guidance includes approximately $33.5 billion in sales from BNT162b2, much higher than $26 billion expected previously.

Adjusted earnings per share guidance was raised to a range of $3.95 to $4.05 from the prior expectation of $3.55-$3.65. The earnings guidance indicates 77% increase over 2020 actual results, compared with 59% previously

Foreign exchange is expected to benefit 2021 revenues and EPS by 4% each.

Research and development expense is expected in the range of $10.0-10.5 billion compared with the prior expectation of $9.8-10.3 billion to account for potential incremental spending for the development of COVID-19 vaccines and antiviral medicines as well as other mRNA-based programs. SI&A spending is expected in the range of $11.5-$12.5 billion, up from $11.0-$12.0 billion expected previously. Adjusted tax rate is expected to be approximately 16% in 2021, compared with 15% expected previously.

Excluding BNT162b2, total revenues in 2021 are expected to be in the range of $45.0 billion to $47.0 billion compared with $44.6 billion to $46.6 billion expected previously. The mid-point of the guidance indicates approximately 7% operational growth year over year, compared with 6% expected previously. Adjusted earnings are expected in the range of $2.55 to $2.65 per share compared with $2.50 to $2.60 per share previously

Our Take

Pfizer’s second-quarter results were strong as it beat estimates for both earnings and sales. Pfizer raised its financial outlook for 2021 for the second time this year, mainly due to increasing revenue expectations from BNT162b2.

Shares were up slightly in pre-market trading. This year so far, Pfizer’s stock has risen 14.4% compared with an increase of 11.1% for the industry.

 

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Pfizer/BioNTech, which have already delivered more than a billion doses of BNT162b2 to help vaccinate the global population, have agreements (signed through mid-July 2021) in place to deliver 2.1 billion doses in 2021. Pfizer said that the guidance for COVID-19 vaccine sales could increase if it signs additional contracts this year. Pfizer/BioNTech expect to manufacture in total up to 3 billion doses by the end of December 2021,

Importantly, excluding the COVID-19 vaccine, Pfizer’s core drug business is also delivering strong growth, which pushed the company to raise its revenue guidance for the core business by $400 million for the year

Pfizer expects continued recovery from the pandemic throughout the year as a larger section of the population gets vaccinated against COVID-19.

Pfizer currently has a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pfizer Inc. Price, Consensus and EPS Surprise

Pfizer Inc. Price, Consensus and EPS Surprise

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