A month has gone by since the last earnings report for Pfizer (PFE Quick QuotePFE - Free Report) . Shares have added about 22% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Pfizer 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 catalysts.

Q3 Earnings Top, COVID Vaccine Drives 2021 View Up

Pfizer reported third-quarter 2021 adjusted earnings per share of $1.34, which comprehensively beat the Zacks Consensus Estimate of $1.08 per share. Earnings rose 129% year over year.

Revenues came in at $24.1 billion, which beat the Zacks Consensus Estimate of $22.4 billion. Sales rose 134% from the year-ago quarter on a reported basis and 130% on an operational basis, mainly driven by the sales of COVID-19 vaccine, Comirnaty. Direct sales and alliance revenues from Comirnaty were $13 billion in the quarter. Excluding revenues from BNT162b2, sales grew 7% operationally driven by 12% volume growth.

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

International revenues rose 242% to $17.0 billion. U.S. revenues rose 30% to $7.1 billion.

While currency benefited sales by 4%, pricing had a negative impact of 5% on sales.

Adjusted selling, informational and administrative (SI&A) expenses rose 5% (operationally) in the quarter to $2.73 billion. Adjusted R&D expenses rose 19% to $2.74 billion due to costs related to the development of COVID-19 antiviral programs and other pipeline medicines.

Segment Discussion

Oncology revenues increased 11% (on an operational basis) to $3.09 billion. Vaccine revenues were $14.58 billion compared with $1.7 billion in the year-ago quarter. Internal Medicine declined 1% to $2.1 billion. The Inflammation & Immunology franchise declined 7% to $1.09 billion. The portfolio of Rare Disease rose 15% to $869 million. Hospital sub-segment’s sales rose 29% to $2.37 billion.

Alliance revenues from Bristol-Myers for Eliquis and direct sales rose 19% to $1.35 billion driven by continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains.

Xtandi recorded alliance revenues of $309 million in the quarter, up 16% year over year driven by strong demand across all approved indications.

Inlyta revenues were $256 million in the quarter, up 30%, driven mainly by growth in the United States and developed Europe due to the combination use of Inlyta for the first-line treatment of advanced renal cell carcinoma patients.

Vyndaqel/Vyndamax recorded sales of $501 million in the quarter, up 42% year over year.

Ibrance revenues rose 1% year over year to $1.38 billion as a recovery in diagnosis rates and treatment initiations outside U.S. markets increased demand. However, sales continued to decline in the United States due to an increase in the 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 declined 7% to $1.45. Prevnar 13 sales declined 2% in the United States due to a drop in the adult indication, hurt significantly by the ongoing prioritization of primary and booster vaccination campaigns for COVID-19 and the later start of the flu season compared with the last year. The change to the Advisory Committee on Immunization Practices (ACIP) recommendation, implemented in June 2019, for the Prevnar 13 adult indication to shared clinical decision-making also hurt U.S. sales. Prevenar 13 revenues declined 13% in international markets.

Total biosimilar revenues were $575 million, up 34% year over year driven by new oncology biosimilars (Trazimera, Zirabev and Ruxience) as well as continued growth in Retacrit (a biosimilar of Epogen and Procrit) in the United States.

Retacrit recorded $110 million of revenues in the quarter, up 7% year over year. Inflectra/Remsima recorded sales of $172 million globally, up 4% year over year.

Sterile injectables global revenues rose 18% operationally to $1.44 billion.

Xeljanz sales declined 7% to $610 million due to an unfavorable change in channel mix and lower new patient starts due to the FDA’s order (given in September) to include a heart-risk warning on the label of Xeljanz, a JAK inhibitor drug, in patients with rheumatoid arthritis.

Enbrel revenues declined 12% to $283 million due to continued biosimilar competition in key European markets and Japan.

Sutent sales declined 31% to $142 million due to the loss of exclusivity in August. Chantix sales declined 97% to $7 million in the quarter hurt by voluntary recalls across several markets (due to the presence of a nitrosamine above acceptable limits) and pause in global shipments.

Ups 2021 Guidance

Pfizer raised its financial outlook for 2021 for the third time this year, mainly due to increasing revenue expectations for Comirnaty.

Revenues are expected in the range of $81.0 billion to $82.0 billion compared with $78.0 billion to $80.0 billion previously. The mid-point of the revenue guidance indicates growth of 94% from 2020 levels compared with 89% previously.

The revenue guidance includes approximately $36.0 billion in sales from Comirnaty, higher than $33.5 billion expected previously. Pfizer/BioNTech expects to deliver 2.3 billion doses of Comirnaty in 2021.

The adjusted earnings per share guidance was raised to the range of $4.13 to $4.18 from the prior expectation of $3.95 to $4.05. The earnings guidance indicates an 84% increase over 2020 actual results, compared with 77% previously.

Foreign exchange is expected to benefit 2021 revenues and EPS by 3% and 4%, respectively.

Research and development expense is expected in the range of $10.4-10.9 billion compared with the prior expectation of $10.0-10.5 billion to account for potential incremental spending for the development of COVID-19 antiviral medicines as well as other mRNA-based programs. SI&A spending is expected in the range of $11.6-$12.1 billion compared with $11.5-$12.5 billion expected previously. The adjusted tax rate is expected to be approximately 16% in 2021 (maintained).

Excluding Comirnaty, total revenues in 2021 are expected to be in the range of $45.0 billion to $46.0 billion compared with $45.0 billion to $47.0 expected previously. The guidance range was tightened around the lower end of the previous range due to the Chantix recall and pause in shipments. The mid-point of the guidance indicates approximately 6% operational growth year over year. Adjusted earnings are expected in the range of $2.60 to $2.65 per share compared with $2.55 to $2.65 per share previously. The mid-point of the earnings guidance indicates approximately 12% operational growth year over year.

The above guidance suggests that excluding Comirnaty, operational revenues will decline by 1% in the fourth quarter due to a fewer number of selling days compared with the fourth quarter (6% headwind) in 2020 and Chantix recall and pause in shipments (2% headwind).

In 2022, Pfizer expects to generate Comirnaty direct sales and alliance revenues of approximately $29 billion by delivering 1.7 billion doses.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -17.33% due to these changes.

VGM Scores

At this time, Pfizer has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Pfizer has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.