) now no longer has a stake in
), its former animal health business. Pfizer said that its
exchange offer under which shareholders were given the option to
exchange all, some or none of their shares of Pfizer common stock
for shares of Zoetis Inc. was oversubscribed.
With the exchange offer being oversubscribed, Pfizer accepted
a part of the validly tendered shares on a pro rata basis. The
company currently expects about 24% of the tendered shares to be
We remind investors that Pfizer had an 80.2% interest in
Zoetis, which started trading on the New York Stock Exchange from
Feb 1, 2013.
Along with announcing the expiry of the exchange offer, Pfizer
lowered its outlook for 2013 to reflect the impact of the
divestment of the remaining stake in Zoetis. The company now
expects to earn $2.10 - $2.20 per share on revenues of $50.8 to
$52.8 billion instead of $2.14 - $2.24 per share on revenues of
$55.3 to $57.3 billion. The Zacks Consensus Estimate for 2013
currently stands at $2.21 per share. We expect downward revisions
in 2013 earnings estimates given the company's revised
Cost of sales is now expected to be 18%-19% instead of
19%-20%. Outlook for both SI&A and R&D expenses has been
reduced. While SI&A expenses are now expected to be $14.2 to
$15.2 billion (old guidance: $15.6 to $16.6 billion), R&D
spend is now expected in the range of $6.1 to $6.6 billion (old
guidance: $6.5 to $7.0 billion). The company expects adjusted
other (income)/deductions of about $800 million, down from the
earlier guidance of $900 million.
We are positive on Pfizer's decision to spin off its animal
health business as it will enable the pharma major to focus on
its core business. Pfizer expects the spin off to be earnings
accretive in 2014.
Pfizer currently carries a Zacks Rank #4 (Sell). Shares were
down 2.64% at market close yesterday. The share price decline was
most likely in reaction to the lowered earnings and revenue
outlook for 2013.
We note that Pfizer also lost EU exclusivity on its erectile
dysfunction drug, Viagra. Generic versions of Viagra were
launched in the EU recently by companies like
). According to IMS Health, Viagra sales were €382.2 million in
Europe for the 12 months ending Mar 31, 2013.
Among large-cap pharma companies,
) currently looks well-positioned with a Zacks Rank #2 (Buy).
NOVO-NORDISK AS (NVO): Free Stock Analysis
PFIZER INC (PFE): Free Stock Analysis Report
TEVA PHARM ADR (TEVA): Free Stock Analysis
ZOETIS INC (ZTS): Free Stock Analysis Report
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