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Pfizer, Inc. (PFE - Free Report) reported fourth-quarter 2017 adjusted earnings per share of 62 cents, which beat the Zacks Consensus Estimate of 56 cents by 10.7%. Earnings also rose 32% year over year driven by higher international sales and lower costs and share count.
The pharma heavyweight delivered revenues of $13.70 billion, which also beat the Zacks Consensus Estimate of $13.61 billion. Revenues rose 1% from the year-ago quarter on a reported basis. On an operational basis, revenues were flat year over year.
Sales in Detail
Currency movement benefited Pfizer’s fourth-quarter revenues by 1%. In February 2017, Pfizer divested its Hospira infusion systems (HIS) business to ICU Medical. Excluding currency headwinds and HIS revenues in the prior-year quarter, sales rose 2% operationally.
Strong performance of newer products like Ibrance (breast cancer), Xtandi (prostate cancer) and Xeljanz (rheumatoid arthritis) somewhat offset lower sales of Enbrel and Viagra, loss of exclusivity for some products and supply shortages in legacy Hospira products.
International revenues rose 5% (up 4% an operational basis) to $7.19 billion. Meanwhile, U.S. revenues declined 4% to $6.51 billion.
Segment Discussion
Pfizer’s reporting segments are Pfizer Innovative Health (IH) and Pfizer Essential Health (EH).
Pfizer IH sales grew 6% on a reported basis (up 5% an operational basis) from the year-ago period to $8.22 billion. Pfizer IH revenues were driven by persistently strong momentum of Eliquis globally and Xeljanz Lyrica, Ibrance and Chantix/Champix, all primarily in the United States.
Ibrance revenues rose 11% to $716 million in the quarter driven by strong U.S. revenues. However, Ibrance sales were softer than the prior quarter as a one-time price adjustment hurt international sales.
Xeljanz sales rose 47% to $410 million. Lyrica sales rose 8% to $1.13 billion. Eliquis alliance revenues and direct sales rose 43% to $710 million. Chantix sales rose 28% to $271 million in the quarter.
Revenues from the blockbuster prostate cancer drug, Xtandi, added to Pfizer’s portfolio following the September 2016 Medivation acquisition, also contributed to U.S. revenues. Xtandi recorded alliance revenues of $168 million in the quarter compared with $150 million in the third quarter.
This was partially offset by continued decline in revenues from Prevnar 13 in the United States and lower revenues of Enbrel and Viagra.
Enbrel revenues declined 13% to $634 million in key European markets due to biosimilar competition. Pfizer has exclusive rights to Amgen, Inc.’s (AMGN - Free Report) blockbuster rheumatoid arthritis(RA) drug, Enbrel, outside the United States and Canada. Total Viagra (IH+EH) sales declined 46% to $209 million due to generic competition that began in December 2017.
Global Prevnar 13/Prevenar 13 revenues rose 7% to $1.53 billion as higher international sales made up for the decline in the United States. Prevnar 13 revenues tanked 7% in the United States due to continued decline in revenues for the eligible adult patient population. However, Prevenar 13 revenues rose 27% in international markets due to favorable timing of government purchases in some emerging markets for the pediatric indication.
Consumer Healthcare revenues declined 2% to $950 million. Global Oncology revenues increased 10% to $1.51 billion. Global Vaccine revenues rose 7% to $1.62 billion. Internal Medicine rose 6% to $2.44 billion. The Inflammation & Immunology franchise rose 6% to $1.10 billion. Additionally, the portfolio of Rare Disease declined 2% to $603 million.
Pfizer is exploring strategic alternatives for its Consumer Healthcare segment including a partial or a full separation through a spin-off, sale or other transaction. A decision is expected this year, which could also be to retain the business.
Pfizer EH segment sales recorded a decline of 7% (down 8% operationally) to $5.48 billion. Excluding HIS revenues, EH sales declined 3%.
EH revenues were hurt by the loss of exclusivity and associated generic competition for products, primarily Pristiq in the United States and Lyrica in Europe, lower revenues from legacy Hospira products due to product shortages and divesture of HIS. However, in the EH business, biosimilars and emerging markets did well in the quarter. Biosimilars revenues rose 72% operationally while emerging markets revenues grew 10% operationally.
Pfizer launched Inflectra, a biosimilar version of Johnson & Johnson (JNJ - Free Report) and Merck’s (MRK - Free Report) blockbuster RA drug Remicade, in November last year. While Inflectra recorded sales of $44 million in the United States and $135 million globally, all other biosimilars brought in sales of $30 million (down 7%) from outside the U.S. markets.
Adjusted selling, informational and administrative (SI&A) expenses declined 3% (operationally) in the quarter to $4.32 billion. Adjusted R&D expenses also declined 9% to $2.3 billion.
2017 Results
Full-year sales were $52.55 billion, flat year over year on an operational basis. Sales marginally beat the Zacks Consensus Estimate of $52.50 billion and were in line with the guidance range of $52.4 billion to $53.1 billion.
Adjusted earnings of $2.65 per share for the full year exceeded the Zacks Consensus Estimate of $2.60 as well as the guided range of $2.58 - $2.62. Earnings rose 11% year over year.
2018 Guidance
Revenues are expected in the range of $53.5 billion to $55.5 billion. The Zacks Consensus Estimate is pegged at $53.72 billion.
Adjusted earnings per share are expected in the range of $2.90 - $3.00, above the Zacks Consensus Estimate of $2.77 per share.
At the mid-point, adjusted EPS is expected to increase 11% while revenues are expected to increase 4%.
Research and development expenses are expected in the range of $7.4–$7.9 billion while SI&A spending is projected in the range of $14.0–$15.0 billion.
Adjusted tax rate is expected to be 17% in 2018.
Our Take
Pfizer’s fourth-quarter results were above expectations as it beat estimates for both earnings and revenues. Meanwhile, it issued an upbeat guidance for 2018. Also Pfizer said that it plans to invest approximately $5 billion in capital projects in the United States over the next five years on increased access to foreign cash following the U.S. tax reforms.
However, after initial gains, shares of Pfizer fell around 1.9% in premarket trading. We believe that lower sales in the United States and a sequentially softer performance of Ibrance in the quarter hurt investor sentiment. In the past year, Pfizer’s shares have increased 24.6%, comparing unfavorably with an increase of 29% for the industry.
Despite top-line headwinds in the form of genericization of key drugs, supply shortages in legacy Hospira products, pricing pressure and rising competition, Pfizer achieved 11% adjusted earnings growth in 2017. New products like Ibrance, contribution from acquisitions, cost-cutting efforts, a lower tax rate and share buybacks helped the company achieve its 2017 guidance. Meanwhile, Pfizer looks well poised to record profit growth in 2018.
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Pfizer (PFE) Stock Falls Despite Q4 Earnings & Sales Beat
Pfizer, Inc. (PFE - Free Report) reported fourth-quarter 2017 adjusted earnings per share of 62 cents, which beat the Zacks Consensus Estimate of 56 cents by 10.7%. Earnings also rose 32% year over year driven by higher international sales and lower costs and share count.
The pharma heavyweight delivered revenues of $13.70 billion, which also beat the Zacks Consensus Estimate of $13.61 billion. Revenues rose 1% from the year-ago quarter on a reported basis. On an operational basis, revenues were flat year over year.
Sales in Detail
Currency movement benefited Pfizer’s fourth-quarter revenues by 1%. In February 2017, Pfizer divested its Hospira infusion systems (HIS) business to ICU Medical. Excluding currency headwinds and HIS revenues in the prior-year quarter, sales rose 2% operationally.
Strong performance of newer products like Ibrance (breast cancer), Xtandi (prostate cancer) and Xeljanz (rheumatoid arthritis) somewhat offset lower sales of Enbrel and Viagra, loss of exclusivity for some products and supply shortages in legacy Hospira products.
International revenues rose 5% (up 4% an operational basis) to $7.19 billion. Meanwhile, U.S. revenues declined 4% to $6.51 billion.
Segment Discussion
Pfizer’s reporting segments are Pfizer Innovative Health (IH) and Pfizer Essential Health (EH).
Pfizer IH sales grew 6% on a reported basis (up 5% an operational basis) from the year-ago period to $8.22 billion. Pfizer IH revenues were driven by persistently strong momentum of Eliquis globally and Xeljanz Lyrica, Ibrance and Chantix/Champix, all primarily in the United States.
Ibrance revenues rose 11% to $716 million in the quarter driven by strong U.S. revenues. However, Ibrance sales were softer than the prior quarter as a one-time price adjustment hurt international sales.
Xeljanz sales rose 47% to $410 million. Lyrica sales rose 8% to $1.13 billion. Eliquis alliance revenues and direct sales rose 43% to $710 million. Chantix sales rose 28% to $271 million in the quarter.
Revenues from the blockbuster prostate cancer drug, Xtandi, added to Pfizer’s portfolio following the September 2016 Medivation acquisition, also contributed to U.S. revenues. Xtandi recorded alliance revenues of $168 million in the quarter compared with $150 million in the third quarter.
This was partially offset by continued decline in revenues from Prevnar 13 in the United States and lower revenues of Enbrel and Viagra.
Enbrel revenues declined 13% to $634 million in key European markets due to biosimilar competition. Pfizer has exclusive rights to Amgen, Inc.’s (AMGN - Free Report) blockbuster rheumatoid arthritis(RA) drug, Enbrel, outside the United States and Canada. Total Viagra (IH+EH) sales declined 46% to $209 million due to generic competition that began in December 2017.
Global Prevnar 13/Prevenar 13 revenues rose 7% to $1.53 billion as higher international sales made up for the decline in the United States. Prevnar 13 revenues tanked 7% in the United States due to continued decline in revenues for the eligible adult patient population. However, Prevenar 13 revenues rose 27% in international markets due to favorable timing of government purchases in some emerging markets for the pediatric indication.
Consumer Healthcare revenues declined 2% to $950 million. Global Oncology revenues increased 10% to $1.51 billion. Global Vaccine revenues rose 7% to $1.62 billion. Internal Medicine rose 6% to $2.44 billion. The Inflammation & Immunology franchise rose 6% to $1.10 billion. Additionally, the portfolio of Rare Disease declined 2% to $603 million.
Pfizer is exploring strategic alternatives for its Consumer Healthcare segment including a partial or a full separation through a spin-off, sale or other transaction. A decision is expected this year, which could also be to retain the business.
Pfizer EH segment sales recorded a decline of 7% (down 8% operationally) to $5.48 billion. Excluding HIS revenues, EH sales declined 3%.
EH revenues were hurt by the loss of exclusivity and associated generic competition for products, primarily Pristiq in the United States and Lyrica in Europe, lower revenues from legacy Hospira products due to product shortages and divesture of HIS. However, in the EH business, biosimilars and emerging markets did well in the quarter. Biosimilars revenues rose 72% operationally while emerging markets revenues grew 10% operationally.
Pfizer launched Inflectra, a biosimilar version of Johnson & Johnson (JNJ - Free Report) and Merck’s (MRK - Free Report) blockbuster RA drug Remicade, in November last year. While Inflectra recorded sales of $44 million in the United States and $135 million globally, all other biosimilars brought in sales of $30 million (down 7%) from outside the U.S. markets.
Adjusted selling, informational and administrative (SI&A) expenses declined 3% (operationally) in the quarter to $4.32 billion. Adjusted R&D expenses also declined 9% to $2.3 billion.
2017 Results
Full-year sales were $52.55 billion, flat year over year on an operational basis. Sales marginally beat the Zacks Consensus Estimate of $52.50 billion and were in line with the guidance range of $52.4 billion to $53.1 billion.
Adjusted earnings of $2.65 per share for the full year exceeded the Zacks Consensus Estimate of $2.60 as well as the guided range of $2.58 - $2.62. Earnings rose 11% year over year.
2018 Guidance
Revenues are expected in the range of $53.5 billion to $55.5 billion. The Zacks Consensus Estimate is pegged at $53.72 billion.
Adjusted earnings per share are expected in the range of $2.90 - $3.00, above the Zacks Consensus Estimate of $2.77 per share.
At the mid-point, adjusted EPS is expected to increase 11% while revenues are expected to increase 4%.
Research and development expenses are expected in the range of $7.4–$7.9 billion while SI&A spending is projected in the range of $14.0–$15.0 billion.
Adjusted tax rate is expected to be 17% in 2018.
Our Take
Pfizer’s fourth-quarter results were above expectations as it beat estimates for both earnings and revenues. Meanwhile, it issued an upbeat guidance for 2018. Also Pfizer said that it plans to invest approximately $5 billion in capital projects in the United States over the next five years on increased access to foreign cash following the U.S. tax reforms.
However, after initial gains, shares of Pfizer fell around 1.9% in premarket trading. We believe that lower sales in the United States and a sequentially softer performance of Ibrance in the quarter hurt investor sentiment. In the past year, Pfizer’s shares have increased 24.6%, comparing unfavorably with an increase of 29% for the industry.
Despite top-line headwinds in the form of genericization of key drugs, supply shortages in legacy Hospira products, pricing pressure and rising competition, Pfizer achieved 11% adjusted earnings growth in 2017. New products like Ibrance, contribution from acquisitions, cost-cutting efforts, a lower tax rate and share buybacks helped the company achieve its 2017 guidance. Meanwhile, Pfizer looks well poised to record profit growth in 2018.
Pfizer carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.
Zacks has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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