Pfizer Inc. (PFE): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Pfizer's second quarter 2014 earnings of $0.58 per share were a couple of cents above the Zacks Consensus Estimate and 4% above the year-ago earnings. Revenues, which declined 2% to $12.8 billion, were above the Zacks Consensus Estimate of $12.4 billion. Revenues were impacted by the loss of exclusivity of certain products including Detrol LA (in the U.S.), the expiry of the Spiriva collaboration in some countries and the Enbrel agreement. Although Pfizer maintained its guidance for 2014, the company cut its revenue outlook. We believe revenues will remain under pressure going forward. However, cost-cutting efforts and share buybacks should help Pfizer achieve its earnings guidance. We remain Neutral on the stock.

Overview:

New York-based Pfizer, Inc. focuses on the development and commercialization of a wide range of products including human and animal biologic and small molecule medicines and vaccines, as well as consumer health care products.

In Oct 2009, Pfizer acquired another large pharma company, Wyeth, for $68 billion. With this acquisition, Pfizer became a more diversified biopharma company with a stronger presence in emerging markets. In Feb 2011, Pfizer acquired King Pharmaceuticals for $3.6 billion.

Pfizer conducts its commercial operations through three business segments while two of these include Innovative business lines, the third comprises the Value business line. One of the Innovative segments (Global Innovative Pharmaceutical - GIP) includes products that have patent protection beyond 2015 while the other focuses on vaccines, oncology and consumer healthcare (Global Vaccines, Oncology and Consumer Healthcare segment - VOC).

The Value segment (Global Established Pharmaceutical segment - GEP) includes products generating strong and consistent cash flow. Apart from including products that have lost market exclusivity, mature, patent-protected products that are expected to lose exclusivity through 2015 in most major markets are also a part of this segment. Moreover, this segment includes biosimilars and collaborations for established products like the company's partnerships with Mylan in Japan, Teuto in Brazil and Hisun in China.

All three segments reflect the performance of developed as well as emerging markets.

Important products in Pfizer's portfolio include Lyrica (for several indications including the management of post-herpetic neuralgia, diabetic peripheral neuropathy and fibromyalgia), Prevnar (vaccine for the prevention of pneumococcal disease), Sutent (advanced renal cell carcinoma), and Enbrel (rheumatoid arthritis, juvenile rheumatoid arthritis, psoriatic arthritis, plaque psoriasis and ankylosing spondylitis) among others.

In Nov 2012, Pfizer divested its Nutrition business to Nestl for a cash consideration of $11.85 billion. In Aug 2011, Pfizer sold its Capsugel unit to Kohlberg Kravis Roberts & Co L.P. for $2.375 billion in cash. In Jun 2013, Pfizer gave up its stake in its Animal Health business which was spun off in early 2013 and started trading on NYSE from Feb 1, 2013 under the name Zoetis.

Pfizer reported worldwide sales of $51.6 billion in 2013 (down 6%). While sales from the Biopharmaceutical segment came in at $47.9 billion, down 7%, Consumer Healthcare contributed $3.3 billion to 2013 sales, up 4%.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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