A month has gone by since the last earnings report for Pfizer (PFE Quick QuotePFE - Free Report) . Shares have added about 5.5% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Q1 Earnings & Sales Miss Estimates

Pfizer’s first-quarter results were lower than expected as it missed estimates for both earnings and sales.

Pfizer 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 5%. The top-line growth was mainly driven by direct sales and alliance revenues from BioNTech for Comirnaty and revenues from 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 due to lower spending on corporate-enabling functions, partially offset by increased spending for Comirnaty and Paxlovid. 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.

Alliance revenues from Bristol-Myers 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 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. Ibrance revenues rose 12% in international markets as demand trends improved following recovery from the pandemic.

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%.

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.

Retacrit recorded $115 million of revenues in the quarter, up 7% year over year. Inflectra/Remsima recorded sales of $135 million globally, down 23% year over year.

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

Xeljanz sales declined 29% to $372 million due to lower prescription volumes globally as doctors’ prescribing patterns shift away from JAK inhibitors following label warnings. In addition, unfavorable wholesaler inventory buying patterns and lower prices in the United States also hurt sales.

Enbrel revenues declined 6% to $280 million due to continued biosimilar competition in key European markets and Japan. 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 includes approximately $32.0 billion in sales from Comirnaty and $22 billion from Paxlovid, which was maintained from the previous expectations. The guidance for Comirnaty and Paxlovid reflects doses/treatment courses to be delivered under supply contracts signed as of mid-April 2022.

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

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 have an additional negative impact of approximately $2 billion on revenues and approximately 11 cents per share on EPS in 2022.

Adjusted cost of sales, as a percentage of sales, is expected in the range of 32, 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.

Excluding COVID-related revenues, total revenues in 2022 are expected to be around $46 billion, representing operational growth of 5%, which is slightly less than Pfizer’s long-term guidance of at least 6% CAGR through 2025.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -20.23% due to these changes.

VGM Scores

At this time, Pfizer has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.

Performance of an Industry Player

Pfizer belongs to the Zacks Large Cap Pharmaceuticals industry. Another stock from the same industry, Eli Lilly (LLY Quick QuoteLLY - Free Report) , has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Lilly reported revenues of $7.81 billion in the last reported quarter, representing a year-over-year change of +14.8%. EPS of $2.62 for the same period compares with $1.87 a year ago.

Lilly is expected to post earnings of $1.90 per share for the current quarter, representing a year-over-year change of +1.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.

Lilly has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.