) posted first quarter 2014 earnings of 57 cents per share, a
couple of cents above the Zacks Consensus Estimate and 11.8%
above the year-ago earnings. Revenues, which declined 9% to $11.4
billion, were below the Zacks Consensus Estimate of $12.0
Revenues were impacted by the loss of exclusivity of certain
products including Lipitor, the expiry of the Spiriva
collaboration in some countries and the Enbrel agreement.
Despite the decline in revenues, first quarter earnings grew
from the year-ago period due to lower costs, a lower tax rate and
a lower share count.
The Quarter in Detail
While foreign exchange cut Pfizer's first quarter revenues by
$364 million or 3%, operational factors cut revenues by $693
million or 6%. International revenues declined 6% to $7.1
billion. Meanwhile, U.S. revenues declined 13% to $4.3
From the first quarter of 2014, Pfizer is reporting through
three operating segments: the Global Innovative Pharmaceutical
segment (GIP); the Global Vaccines, Oncology and Consumer
Healthcare segment (VOC); and the Global Established
Pharmaceutical segment (GEP). While the GEP, GIP and Consumer
healthcare segments recorded a decline in revenues in the first
quarter, Global Oncology recorded growth.
The GEP segment recorded a 13% decline in revenues, which came
in at $5.99 billion. Factors like the presence of additional
generic competition for Detrol LA in the U.S. and Viagra in
several EU markets and generic competition for Lipitor and other
products that lost exclusivity, the Dec 2012 termination of the
co-promotion agreement for Aricept in Japan, lower share in
Spiriva revenues in certain regions and the termination of the
Spiriva collaboration in other regions led to the decline.
However, Lyrica continued to perform well with total sales coming
in at $1.15 billion, up 8%.
GIP revenues declined 7% to $3.1 billion reflecting the end of
the Enbrel co-promotion agreement, the loss of exclusivity for
Lyrica in Canada in Feb 2013 and the performance of Champix in
ex-U.S. markets and that of Genotropin, mainly in the U.S. This
was partially offset by the performance of Lyrica in the U.S. and
Japan, Enbrel in international markets and Eliquis and Xeljanz in
Consumer Healthcare revenues decreased 6% to $761 million due
to a less severe cold and flu season in the U.S., and increased
competition in the pain management market. This was partially
offset by operational growth in some emerging markets.
Global Oncology revenues increased 7% to $488 million with
performance being driven by Inlyta and Xalkori across the world.
However, Sutent revenues were weak in the U.S. and some emerging
markets due to the timing of purchases.
Global Vaccine revenues remained flat at $925 million. Prevnar
13 was positively impacted by government purchasing patterns
despite lower demand due to adverse weather conditions.
Selling, informational and administrative (SI&A) expenses
declined 5% to $3.0 billion during the quarter. R&D expenses
remained flat at $1.6 billion. Pfizer should realize cost savings
due to workforce reductions, actions taken with the R&D
portfolio, as well as savings from a smaller physical
Pfizer maintained its outlook for 2014 and said it expects
full year contribution from Celebrex. The company expects
earnings of $2.20 - $2.30 per share on total revenues of $49.2
billion - $51.2 billion. The Zacks Consensus Estimate for
earnings and revenues is currently $2.24 per share and $48.9
The revenue guidance includes the negative impact of about $3
billion due to recent and expected genericization plus the
expiration and near-term termination of certain collaboration
Pfizer expects SI&A spend of $13.5 billion - $14.5 billion
and R&D spend of $6.4 billion - $6.9 billion.
Meanwhile, Pfizer, which repurchased shares worth $1.7 billion
through May, expects to buy back shares worth $5 billion in
Pfizer's first quarter results were mixed with the company
beating on earnings but missing on revenues. The company's
top-line remains under pressure due to genericization. We believe
genericization and the expiration of a few co-promotion
agreements will continue to hamper top-line growth. However,
cost-cutting efforts and share buybacks should help Pfizer
achieve its earnings guidance.
Pfizer is currently looking to combine with
). Although the company sweetened its initial offer to
AstraZeneca, the latter refused the second proposal as well. By
combining with AstraZeneca, Pfizer is looking to boost its
pipeline, realize operational synergies, have a more efficient
tax structure and speed up earnings growth. However, with
AstraZeneca refusing the second offer, Pfizer may have to return
with another offer or go hostile.
Pfizer currently carries a Zacks Rank #4 (Sell). Better-ranked
stocks in the healthcare sector include companies like
Alexion Pharmaceuticals, Inc.
Gilead Sciences Inc.
) -- both are Zacks Rank #1 (Strong Buy) stocks.
ALEXION PHARMA (ALXN): Free Stock Analysis
ASTRAZENECA PLC (AZN): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
PFIZER INC (PFE): Free Stock Analysis Report
To read this article on Zacks.com click here.