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Pfizer (PFE) Q1 Earnings & Sales Miss Estimates, Stock Down

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Pfizer (PFE - Free Report) reported first-quarter 2022 adjusted earnings per share of $1.62, which missed the Zacks Consensus Estimate of $1.66 per share. Earnings rose 72% year over year.

Pfizer, along with several other companies, at the request of the SEC, is making changes to its non-GAAP reporting. Per the change, expenses for all acquired in-process research and development (IPR&D) costs connected with upfront and milestone payments related to collaborations and licensing agreements will now be included in non-GAAP results.

This change hurt Pfizer’s adjusted earnings by 5 cents in the first quarter. Pfizer will also now exclude all amortization of intangibles from adjusted results, which benefited adjusted earnings by 1 cent in the quarter.

Revenues came in at $25.66 billion, which missed the Zacks Consensus Estimate of $26.49 billion. Sales rose 77% from the year-ago quarter on a reported basis, reflecting operational growth of 82% and currency headwinds of 7%. The top-line growth was mainly driven by direct sales and alliance revenues from its partner, BioNTech (BNTX - Free Report) for the COVID-19 vaccine, Comirnaty and revenues from Pfizer’s oral antiviral pill for COVID, Paxlovid.

Excluding revenues from Pfizer/BioNTech’s Comirnaty and Paxlovid, sales rose 2% operationally. Higher sales of brands like Eliquis and Vyndaqel/Vyndamax globally, improved Prevnar vaccine sales in the United States and higher biosimilars revenues were partially offset by weaker sales of Ibrance in the United States, Xeljanz globally and sterile injectable products.

Fewer selling days in the quarter compared with the year-ago quarter also hurt sales.

International revenues rose 151% to $16.74 billion. U.S. revenues rose 18% to $8.9 billion.

Adjusted selling, informational and administrative (SI&A) expenses declined 4% (operationally) in the quarter to $2.5 billion. Adjusted R&D expenses rose 16% to $2.29 billion due to costs related to the development of COVID-19 treatment programs and other pipeline medicines.

Segment Discussion

Oncology revenues increased 6% (on an operational basis) to $2.97 billion. Vaccine revenues were $14.9 billion compared with $4.9 billion in the year-ago quarter. Internal Medicine declined 3% to $2.44 billion. The Inflammation & Immunology franchise declined 20% to $821 million. The portfolio of Rare Disease rose 23% to $963 million. Hospital sub-segment’s sales rose 72% to $3.19 billion.

Sales of Key Drugs

Direct sales and alliance revenues from Comirnaty were $13.23 billion in the quarter, higher than $12.5 billion in the previous quarter, driven by global uptake including pediatric and booster doses.

Paxlovid contributed $1.47 billion to sales in the first quarter, much higher than $76 million in the fourth quarter of 2021. However, Paxlovid sales fell short of investor expectations.

Paxlovid was approved in the United States in December 2021 and has already received emergency or conditional authorization for use in certain populations in approximately 50 countries.

Alliance revenues from Bristol-Myers (BMY - Free Report) for Eliquis and direct sales rose 12% to $1.79 billion. Continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains benefited alliance revenues from Bristol-Myers for Eliquis sales in the quarter.

Ibrance revenues rose 1% year over year to $1.24 billion as higher ex U.S. revenues were offset by lower revenues in the U.S. market. Sales declined in the United States due to an increase in the proportion of patients using Pfizer’s Patient Assistance Program (which provides Ibrance free of charge to certain low-income patients) due to COVID-related economic hardships in the United States.

Global Prevnar family revenues rose 23% to $1.57 billion. The Prevnar family includes revenues from Prevnar 13/Prevenar 13 (pediatric and adult) and Prevnar 20 (adult).

Prevnar sales rose 59% in the United States due to the favorable timing of government purchases for the pediatric indication for Prevnar 13 and strong retail and wholesaler stocking of Prevnar 20 for the adult indication. Prevnar revenues declined 12% in international markets.

Xtandi recorded alliance revenues of $268 million in the quarter, flat year over year.

Inlyta revenues were $234 million in the quarter, up 4%.

New rare disease drug Vyndaqel/Vyndamax recorded sales of $612 million in the quarter, up 41% year over year.

Total biosimilar revenues were $605 million, up 16% year over year, driven by the strong growth of oncology biosimilars (Trazimera, Zirabev and Ruxience) in the United States

Sterile injectables global revenues declined 9% operationally to $1.33 billion.

Xeljanz sales declined 29% to $372 million due to lower prescription volumes globally, unfavorable wholesaler inventory buying patterns and lower prices in the United States.

Enbrel revenues declined 6% to $280 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 40% to $114 million due to the loss of patent exclusivity.

2022 Guidance

Pfizer maintained its previously issued sales guidance for 2022 while lowering its earnings per share expectations.

Revenues are still expected in the range of $98.0 billion to $102.0 billion. The mid-point of the revenue guidance indicates operational growth of 27% from the 2021 levels.

The revenue guidance falls short of the Zacks Consensus Estimate of $114.9 billion.

The revenue guidance includes approximately $32.0 billion in sales from Comirnaty and $22 billion from Paxlovid, which was maintained from previous expectations. The guidance for Comirnaty and Paxlovid reflects doses/treatment courses to be delivered under supply contracts signed as of mid-April 2022.

Adjusted earnings per share are expected to be in the range of $6.25 to $6.45, lower than the prior expectation of $6.35 to $6.55 to include the impact of accounting policy changes discussed above. The mid-point of the earnings guidance indicates a 61% increase over 2021 actual results.

Foreign exchange is expected to hurt revenues by approximately $2 billion and EPS by approximately 11 cents in 2022.

Adjusted cost of sales, as a percentage of sales, is expected in the range of 32%-34%, versus 32.2% to 34.2% previously. Research and development expense is expected in the range of $11.0-$12 billion versus $10.5-11.5 billion previously. SI&A spending is expected in the range of $12.5-$13.5 billion. Acquired IPR&D expenses are expected to be approximately $0.9 billion. The adjusted tax rate is expected to be approximately 16% in 2022.

Our Take

Pfizer’s first-quarter results were lower than expected as it missed estimates for both earnings and sales. Pfizer maintained its previously issued sales guidance for 2022 and refrained from raising its expectations for Comirnaty and Paxlovid, which hurt investor sentiment and led the stock to decline 1.3% in pre-market trading.

This year so far, Pfizer’s stock has declined 17.5% against an increase of 4.4% for the industry.

 

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Pfizer, did say, however, that currency headwinds will have a $1 billion negative impact on Comirnaty’s guidance, and a $500 million impact on Paxlovid’s guidance.

Pfizer, did say, however, that currency headwinds had a $1 billion negative impact on Comirnaty’s guidance, and a $500 million impact on Paxlovid’s guidance. Nonetheless, we believe that no company is as strongly placed in the COVID vaccines/treatment market as Pfizer right now. The vaccine, together with the Paxlovid pill, is expected to generate a combined $54 billion in sales in 2022 out of Pfizer’s total revenue expectations of around $100 billion. However, there do remain concerns about Pfizer’s top-line drivers beyond its COVID products in the future.

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

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