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Is a Beat Likely for Pfizer (PFE) This Earnings Season?

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We expect Pfizer (PFE - Free Report) to beat expectations when it reports fourth-quarter and full-year 2021 results on Feb 8, before market open. In the last reported quarter, the company beat earnings expectations by 24.07%.

The drug giant’s performance has been mixed, with the company exceeding earnings expectations in three of the last four quarters while missing in one. The company has a four-quarter earnings surprise of 10.85%, on average.

Pfizer Inc. Price and EPS Surprise

Pfizer Inc. Price and EPS Surprise

 

 

 

 

 

 

 

 

Pfizer Inc. price-eps-surprise | Pfizer Inc. Quote

Pfizer’s stock has risen 56.8% this year so far compared with an increase of 21.9% for the industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

Factors to Note

A key contributor to Pfizer’s sales in the fourth quarter is likely to have been its and partner BioNTech’s (BNTX - Free Report) COVID-19 vaccine, Comirnaty. Sales are expected to be higher than third-quarter sales of $13.0 billion.

Excluding, Pfizer/BioNTech’s Comirnaty, operational revenues are expected to decline 1% in the fourth quarter due to a fewer number of selling days compared with the fourth quarter in 2020 and Chantix recall and pause in shipments.

Higher sales of Pfizer’s key brands, Eliquis (alliance revenue), Xtandi and Inlyta, and significant contribution from newer drug Vyndaqel/Vyndamax and higher biosimilar revenues are likely to have contributed to sales growth in the fourth quarter of 2021.

However, sales of some key medicines like Xeljanz and Ibrance in the United States and Prevnar 13/Prevenar 13 vaccine, both in the United States and international markets, declined in the third quarter. It remains to be seen if the sales trends of these products improved in the fourth quarter.

The Zacks Consensus Estimate for oncology and vaccine products is $3.22 billion and $14.12 billion, respectively.

Sales of some other drugs like Chantix, Sutent and Enbrel in international markets are likely to have declined in the fourth quarter, continuing the trend of the past few quarters. While Sutent sales are expected to have been hurt due to the loss of exclusivity in August 2021, sales of Enbrel in key European markets and Japan are likely to have been hurt due to biosimilar competition. Voluntary recalls across several markets (due to the presence of a nitrosamine above acceptable limits) and pause in global shipments are likely to have hurt the sale of Chantix in the fourth quarter.

R&D costs are expected to have been higher in the fourth quarter due to incremental spending on COVID-19 vaccines and antiviral medicines as well as other mRNA-based programs.

Key Developments in Q4

In the quarter, the FDA extended the Emergency Use Authorization (EUA) for the booster dose of Pfizer/BioNTech’s COVID-19 vaccine to allow its use in all adults as well as children 12 through 17 years of age. In addition, the FDA granted emergency approval to the COVID-19 vaccine for children 5 through 11 years of age, making it the first vaccine to be authorized in the United States for this age group.

Most importantly, in December 2021, the FDA granted EUA to Pfizer’s promising oral antiviral candidate for COVID-19, Paxlovid, in combination with low-dose ritonavir to treat mild-to-moderate COVID-19 in adult and pediatric patients at increased risk of hospitalizations or death. Paxlovid can be prescribed as an at-home treatment to help fight mild-to-moderate COVID-19 infection. It can help prevent hospitalization in patients with a mild-to-moderate form of the disease but at high risk of severe COVID-19 and thus lower some of the pressure facing the healthcare and hospital systems. However, Paxlovid’s sales are expected to have been negligible in the fourth quarter.

In December, Pfizer announced a definitive agreement to acquire Arena Pharmaceuticals for $100 per share or $6.7 billion in an all-cash deal. The deal will add Arena’s lead candidate etrasimod, a next-generation and selective sphingosine-1-phosphate (S1P) receptor modulator, to Pfizer’s inflammation and immunology pipeline. Etrasimod is in late-stage development for ulcerative colitis. It is also being studied across multiple gastroenterology and dermatology indications.

In addition, Arena Pharmaceutical’s pipeline includes candidates like temanogrel and APD41, which are in mid-stage development for cardiovascular diseases.

Earnings Whispers

Our proven model predicts an earnings beat for Pfizer in the soon-to-be-reported quarter because it has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely beat.

Earnings ESP: Pfizer’s Earnings ESP is +1.18% as the Most Accurate Estimate of 86 cents per share is pegged higher than the Zacks Consensus Estimate of 85 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pfizer has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Another Stock to Consider

Here is another large drug stock that has the right combination of elements to beat on earnings this time around:

Merck (MRK - Free Report) has an Earnings ESP of +9.03% and a Zacks Rank #3.The company is scheduled to report earnings on Feb 3. Merck’s stock has risen 14.3% in the past year.Estimates for Merck’s 2022 earnings have gone up from $6.88 per share to $6.97 per share over the past 60 days.

The drugmaker’s performance has been rather weak, with the company missing earnings expectations in three of the trailing four quarters while beating in one. The company delivered a four-quarter negative earnings surprise of 1.23%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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