Pfizer and Merck Earnings Were Good but Their Stocks Diverge
Pfizer reported first-quarter earnings of 80 cents per share, beating the S&P Capital IQ Consensus estimate of 71 cents. The company reported revenue of $12 billion. Merck reported earnings of $1.50 per share, 16 cents more than the S&P Capital IQ Consensus estimate, and revenue of $12.1 billion.
The two pharmaceutical giants released earnings Tuesday morning that beat analyst expectations. But while shares of Pfizer were up, shares of Merck were down.
Two of America’s biggest pharmaceutical companies, Pfizer and Merck, released earnings Tuesday morning that beat analyst expectations. But while shares of Pfizer were up 2.3% in premarket trading, shares of Merck were down 2.7%, while S&P 500 futures were up 1.5%.
Pfizer (ticker: PFE) reported first-quarter earnings of 80 cents per share, beating the S&P Capital IQ Consensus estimate of 71 cents. The company reported revenue of $12 billion for the quarter.
Merck (MRK) reported earnings of $1.50 per share, 16 cents more than the S&P Capital IQ Consensus estimate, and quarterly revenue of $12.1 billion.
But while Merck lowered its guidance for the full 2020 fiscal year in light of the Covid-19 pandemic, Pfizer reaffirmed the guidance it issued before the pandemic was in full force. Merck said it expects non-GAAP earnings per share of between $5.17 and $5.37, down from its previous estimate of between $5.62 and $5.77.
Pfizer expects adjusted diluted earnings per share of between $2.82 and $2.92, unchanged from the guidance issued in late January.
“We expect Pfizer shares to continue their recent rally following the release of [first-quarter] 2020 results that beat expectations,” Mizuho analyst Vamil Divan wrote in a Tuesday morning note.
Mara Goldstein, who covers Merck for Mizuho, wrote that Merck’s earnings beat was strong, but said that the Covid-19 epidemic “haircuts” the company’s 2020 guidance.
Shares of Pfizer are down 2.2% this year, while shares of Merck are down 7.7%. The S&P 500 is down 10.9%.
In its earnings release, Merck said the impact of Covid-19 on the company’s revenue in the first quarter was immaterial, but that it expects a $2.1 billion revenue hit over the course of the year.
“Roughly two-thirds of Merck’s pharmaceutical revenue is comprised of physician-administered products, which, despite strong underlying demand, are being impacted by social distancing measures, fewer well visits and delays in elective surgeries due to Covid-19,” Merck said. “These impacts, as well as prioritization of Covid-19 patients at health-care providers, are resulting in reduced administration of many of our human health products.”
Pfizer, for its part, wrote that while the rate of new prescriptions for some products was down, and vaccination rates had slowed, those hits would be offset in part by patients taking out larger prescription refills to stock up for the lockdown. The company also saw increased demand in some products, which it said may be attributable to doctors prescribing them to treat Covid-19 or related conditions.
In a Tuesday morning note, Evercore ISI analyst Umer Raffat wrote that Merck’s business is different from big pharmaceutical competitors that are maintaining their guidance, because its sales rely heavily on drugs administered by doctors.
“The key challenge for MRK in [a Covid-19] environment is ACCESS…not demand,” Raffat wrote.
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