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Pfizer (PFE) Q4 Earnings Top, 2022 Sales View Grim, Stock Down

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Pfizer, Inc. (PFE - Free Report) reported fourth-quarter 2021 adjusted earnings per share of $1.08, which comprehensively beat the Zacks Consensus Estimate of 85 cents per share. Earnings rose 152% year over year.

Revenues came in at $23.8 billion, slightly missing the Zacks Consensus Estimate of $23.9 billion. Sales rose 105% from the year-ago quarter on a reported basis and 106% on an operational basis mainly driven by the sales of Pfizer and German partner BioNTech’s (BNTX - Free Report) COVID-19 vaccine, Comirnaty. Direct sales and alliance revenues from Comirnaty were $12.5 billion in the quarter, less than $13.0 billion in the previous quarter. Excluding revenues from Pfizer/BioNTech’s Comirnaty and Pfizer’s new COVID-19 antiviral pill Paxlovid, sales declined 2% operationally.

Higher sales of brands like Eliquis, Vyndaqel/Vyndamax and Inlyta globally, Xtandi in the United States and higher biosimilars revenues were offset by weaker sales of Prevnar 13, Chantix globally, Ibrance in the United States and sterile injectable products.

Fewer selling days in the fourth quarter of 2021 compared with last year’s fourth quarter also hurt sales in the quarter.

International revenues rose 181% to $16.2 billion. U.S. revenues rose 32% to $7.68 billion.

Adjusted selling, informational and administrative (SI&A) expenses rose 10% (operationally) in the quarter to $3.94 billion. Adjusted R&D expenses rose 14% to $3.5 billion due to costs related to the development of COVID-19 treatment programs and other pipeline medicines.

Segment Discussion

Oncology revenues increased 8% (on an operational basis) to $3.24 billion. Vaccine revenues were $13.9 billion compared with $2.0 billion in the year-ago quarter. Internal Medicine declined 3% to $2.24 billion. The Inflammation & Immunology franchise declined 2% to $1.23 billion. The portfolio of Rare Disease rose 12% to $950 million. Hospital sub-segment’s sales rose 1% to $1.88 billion.

Alliance revenues from Bristol-Myers for Eliquis and direct sales rose 19% to $1.5 billion, driven by continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains.

Ibrance revenues declined 2% year over year to $1.4 billion 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 in the United States.

Global Prevnar 13/Prevenar 13 revenues declined 25% to $1.3 billion. Prevnar 13 sales declined 27% in the United States due to the unfavorable timing of government purchases for the pediatric indication and ongoing prioritization of primary and booster vaccination campaigns for COVID-19. Prevenar 13 revenues declined 24% in international markets.

Xtandi recorded alliance revenues of $306 million in the quarter, up 8% year over year.

Inlyta revenues were $260 million in the quarter, up 15%.

New rare disease drug Vyndaqel/Vyndamax recorded sales of $561 million in the quarter, up 34% year over year.

Total biosimilar revenues were $680 million, up 30% 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

Sterile injectables global revenues declined 4% operationally to $1.44 billion.

Xeljanz sales rose 4% to $721 million due to favorable wholesaler inventory buying patterns in the United States, as well as growth in the emerging markets for the rheumatoid arthritis indication.

In the last week of December 2021, the FDA granted Emergency Use Authorization (EUA) to Paxlovid, for the treatment of mild-to-moderate COVID-19 in patients at increased risk of hospitalizations or death. Paxlovid contributed $76 million to U.S. sales in the fourth quarter of 2021.

Enbrel revenues declined 12% to $297 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.

Amgen markets Enbrel in North America. Enbrel is Amgen’s largest product accounting for 21% of product sales.

Sutent sales declined 32% to $137 million due to the loss of exclusivity. Chantix revenues were hurt by a pause in global shipments across several markets (due to the presence of a nitrosamine above acceptable limits).

2021 Results

Full-year 2021 sales rose 95% to $81.3 billion, slightly missing the Zacks Consensus Estimate of $81.6 billion but falling within the guided range of $81.0 billion to $82.0 billion.

Adjusted earnings for 2021 were $4.42 per share, which beat the Zacks Consensus Estimate of $4.19 per share and came ahead of the guided range of $4.13 to $4.18. Earnings were up 96% year over year

2022 Guidance

Pfizer issued its financial guidance for 2022.

Revenues are expected in the range of $98.0 billion to $102.0 billion. The revenue guidance fell significantly short of the Zacks Consensus Estimate of $108.6 billion.

The mid-point of the revenue guidance indicates growth of 23% from 2021 levels.

The revenue guidance includes approximately $32.0 billion in sales from Comirnaty and $22 billion from Paxlovid. The Comirnaty sales guidance was more than the previous expectations of $29 billion.

Adjusted earnings per share are expected to be in a range of $6.35 to $6.55. The Zacks Consensus Estimate stands at $6.41 per share. The mid-point of the earnings guidance indicates a 46% increase over 2021 actual results.

Foreign exchange is expected to hurt revenues and EPS by 1% each in 2022.

Research and development expense is expected in the range of $10.5-11.5 billion. SI&A spending is expected in the range of $12.5-$13.5 billion. The adjusted tax rate is expected to be approximately 16% in 2022.

Our Take

Pfizer’s fourth-quarter results were mixed as it beat estimates for earnings but missed the same for sales. Pfizer sales guidance for 2022 also fell short of investor expectations.

Shares were down 4.4% in pre-market trading in response to Pfizer’s lower-than-expected sales expectations for 2022. This year so far, Pfizer’s stock has declined 9.2% compared with a decrease of 3.3% for the industry.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Shares of Moderna (MRNA - Free Report) , which also markets an mRNA-based COVID-19 vaccine like Pfizer, declined 4% in pre-market trading after Pfizer issued lower-than-expected sales guidance for 2022.

Moderna is due to report fourth-quarter results on Feb 24. Earlier, Moderna had said that it has advance purchase agreements worth approximately $20 billion for 2022 for the vaccine.

Excluding revenues from Comirnaty and Paxlovid, Pfizer’s sales declined in the quarter which raises questions about Pfizer’s top-line drivers beyond its COVID products in the future.

Nonetheless, we believe that no company is as strongly placed in the COVID vaccines/treatment market as Pfizer right now. While the vaccine should continue to boost revenues in 2022, Paxlovid should also become an important top-line driver. Paxlovid is expected to work well against the Omicron variant, while most of the monoclonal antibody drugs appear to be largely ineffective against the same.

Pfizer currently has a Zacks Rank #1 (Strong Buy).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

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


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