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Earnings Preview: Pfizer

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Pfizer (PFE - Free Report) is slated to report its third quarter earnings on November 1, 2012 before the opening bell. The company, which was previously scheduled to release third quarter results on October 30, postponed its earnings release date due to the expected severe weather conditions associated with Hurricane Sandy.

The current Zacks Consensus Estimate for the third quarter is 52 cents per share, representing a year-over-year decline of 15.7%. Full year earnings are expected to be $2.20 per share, down 4.6% from the year-ago period.

Pfizer has surpassed earnings estimates in each of the last four quarters with a trailing four-quarter average of 8.35%. Analysts, however, expect third quarter 2012 earnings to meet expectations.

Second Quarter Recap

Pfizer posted second quarter earnings of 62 cents per share, well above the Zacks Consensus Estimate of 55 cents and 5% above the year-ago earnings. Despite the loss of exclusivity of certain products and the unfavorable impact of currency fluctuation, earnings were boosted by cost reduction, productivity initiatives and a lower share count.

Revenues fell 9% to $15.1 billion, slightly above the Zacks Consensus Estimate of $15.0 billion. Loss of exclusivity impacted second quarter 2012 revenues by $1.8 billion or 11% compared with the year-ago period.

Including one-time items, second quarter earnings from continuing operations increased 31% to 42 cents.

Agreement of Analysts

Estimate revisions for Pfizer for the third quarter show a downward trend with 6 of the 12 analysts providing third quarter estimates lowering the same over the last 30 days. Only 2 analysts moved in the opposite direction during this time period.

There have been no estimate revisions over the last 7 days.

As far as 2012 is concerned, 4 of the 16 analysts providing estimates have lowered their estimates over the last 30 days with 2 analysts moving in the opposite direction. There have been no estimate revisions over the last 7 days.

Magnitude of Estimate Revisions

The Zacks Consensus Estimates for the third quarter as well as the full year 2012 have gone down a penny each over the last 30 days. The downward revision in estimates mainly reflects the adjustment of expenses related to the company’s Nexium OTC agreement with AstraZeneca (AZN - Free Report) .

Neutral on Pfizer

We currently have a Neutral recommendation on Pfizer, which carries a Zacks #3 Rank (short-term ‘Hold’ rating). While near-term earnings will be driven by cost cutting efforts and share repurchases, longer-term growth will depend on the success of drug development.

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