Pfizer (PFE)
In the first three months of the year, Pfizer overall profit was down 26%, but the real story is in the adjusted earnings number. The adjusted earnings indicate that Pfizer is healthy and investors were pleased with the results raising Pfizer shares in the early hours on Tuesday.
Daily Chart
If you are not able to see the chart, your email client probably does not support javascript. To view it, please
click here
Stock Analysis
The world’s largest pharmaceutical, Pfizer posted a profit of $2.03 billion or 25 cents a share, down from $2.73 billion or 40 cents per share for the same quarter in 2009. However, the adjusted earnings number posted at 60 cents-per-share, beating first quarter adjusted earnings from a year ago by 6 cents. The report also beat the analyst projection of a profit of 53 cents per share.
The large difference in the two numbers is a result of the special items that had to be accounted for in the first quarter. First, the healthcare bill reduced revenue by $56 million by requiring greater rebates on drugs purchased through government programs, Medicaid and Medicare. Pfizer expects the new law to decrease revenue by $300 million for the year and $800 million by 2012. Secondly, most of the charges related to the
Wyeth acquisition that occurred last October were included in the accounting for Q1 and served as a drag on profits.
However, the news is mostly good for Pfizer as the revenue from Wyeth products begin to roll in. The new Wyeth products were led by the antidepressant Effexor, the children’s vaccine Prevnar, and rheumatoid arthritis therapy Enbrel. Wyeth drugs served to lift Pfizer revenue to $16.75 million, an increase of 54 percent over revenue of $10.87 from the previous year before the merger. Pfizer chief executive, Jeff Kindler highlighted this fact: “Last year’s acquisition of Wyeth strengthened our ability to offer new health solutions for every stage of life, which shaped Pfizer into a much more diversified company. We believe Pfizer is now well-positioned to deliver steady earnings growth.” The Wyeth products are proving to be a good complement to the Pfizer flagship drugs: the cholesterol reducing Lipitor which saw an increase in sales of 1%, pain medication Lyrica, up 6% and the impotence drug, Viagra.
A good currency exchange rate also favorably impacted revenue by $733 million or 7 percent and the company projects adjusted earnings of $2.10 to $2.20 for 2010. Two weeks ago, Pfizer announced a dividend payment of 18 cents per share that will be paid on June 1 to shareholders as of May 7, 2010. The dividend will be the 286th consecutive quarterly dividend given out by Pfizer.
Pfizer seems to have adjusted to the added expense of government mandates, so the largest area of concern going forward is the expiration of drug patents, particularly the Lipitor patent. Pfizer may lose Lipitor exclusivity as early as next year or as late as 2010. Since Lipitor provides about 23% of Pfizer sales, competition with generic versions of the drug really have potential to eat into Pfizer profits. To keep profits flowing, Pfizer must continue to innovate and adjust; moves like the Wyeth merger are a great way to move the company forward. In addition to the new products offered through Wyeth, Pfizer is rumored to have as many as 58 new drugs in Phase 3 of clinical trials. Obviously, not all of these drugs will make it to market and there is no way to know if any of those that win final approval will grab a large share of the market. That said, Pfizer’s performance over the long haul demonstrates that the company knows the market and will continue to find ways to boost profits.
Other news about Pfizer:
Other stocks in the news:
VN:F [1.9.17_1161]
Rating: 0.0/5 (0 votes cast)
Other relevant articles you may like
Joshua Caucutt is long-time market follower and finance writer. Debt management, entrepreneurship and government economic policy are areas of emphasis. He regularly contributes to the
Stock of the Day analysis.
