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Pfizer Beats on Q2 Earnings and Revenues, Revises Outlook - Analyst Blog

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Pfizer Inc.PFE posted second quarter 2015 earnings of 56 cents per share, beating the Zacks Consensus Estimate of 51 cents but declining 3% from the year-ago period.

Pfizer Inc. - Earnings Surprise | FindTheBest

Revenues, which declined 7% to $11.853 billion, were above the Zacks Consensus Estimate of $11.414 billion.

The Quarter in Detail

While foreign exchange rates cut Pfizer's second quarter revenues by 8% ($1 billion), operational growth was 1% ($125 million). International revenues declined 13% to $6.9 billion. Meanwhile, U.S. revenues grew 2% to $5 billion.

Although the Global Established Pharmaceutical (GEP), Global Innovative Pharmaceutical (GIP) and Consumer Healthcare segments recorded a decline in revenues in the second quarter, the Global Oncology and Global Vaccines segments recorded growth.

The GEP segment recorded a 22% decline in revenues, which came in at $5.1 billion. Factors like the presence of generic competition for Celebrex, the Jan 2015 entry of generic competition for Zyvox IV and Lyrica in certain developed EU markets from the first quarter and the termination of the Spiriva collaboration in most countries led to the decline. Celebrex revenues plunged 89% in the U.S.

GIP segment revenues declined 1% to $3.5 billion reflecting generic competition for Rapamune in the U.S. and increased competition for BeneFIX in the U.S. This was partially offset by the strong performance of Lyrica in the U.S. and Japan, Xeljanz in the U.S. and Eliquis across the world.

Consumer Healthcare revenues declined 8% to $840 million reflecting the non-recurrence of initial retailer stocking of Nexium 24HR in the U.S. in the year-ago quarter.

Global Oncology revenues increased 25% to $713 million with performance being driven by Xalkori and Inlyta across the world and recently launched Ibrance which contributed $140 million to sales, significantly above first quarter 2015 sales of $38 million.

Global Vaccine revenues grew 44% to $1.6 billion. Prevnar 13 was positively impacted by increased uptake among adults thanks to the positive recommendation from the U.S. Centers for Disease Control and Prevention's Advisory Committee on Immunization Practices for use in adults aged 65 and over. Revenues were also boosted by the inclusion of revenues associated with the acquisition of Baxter's BAX portfolio of marketed vaccines in Europe.

Selling, informational and administrative (SI&A) expenses decreased 3% to $3.4 billion during the quarter. R&D expenses increased 1% to $1.7 billion.

Guidance Revised

Pfizer raised the midpoint of its 2015 guidance range for revenues by $500 million and for earnings by 4 cents and now expects 2015 earnings of $2.01 to $2.07 per share on revenues of $45.0 to $46.0 billion (old guidance: earnings of $1.95 - $2.05 per share on revenues of $44 billion - $46 billion). The Zacks Consensus Estimate for earnings and revenues is currently $2.04 per share and $45.8 billion, respectively.

Pfizer continues to expect SI&A spend of $12.8 billion - $13.8 billion and now expects R&D spend of $7.3 - $7.6 billion, up from the earlier guidance of $6.9 billion - $7.4 billion.

Meanwhile, Pfizer is set to acquire Hospira HSP for a total enterprise value of approximately $17 billion in the second half of 2015.

Our Take

Pfizer's second quarter results surpassed expectations with the company beating on both the top- and bottom-line. Pfizer raised the midpoint of its 2015 guidance range for both earnings and revenues.

While we believe genericization, unfavorable currency movement and the expiration of a few co-promotion agreements will continue to hamper top-line growth, cost-cutting efforts and share buybacks should help Pfizer achieve its earnings guidance. Moreover, the upcoming Hospira acquisition should significantly expand Pfizer's sterile injectable and biosimilar capabilities. Pfizer will also gain access to Hospira's lucrative biosimilar portfolio of both marketed and pipeline assets.

Pfizer is a Zacks Rank #3 (Hold) stock. Eli Lilly and Company LLY is a better-ranked stock in the health care sector with a Zacks Rank #2 (Buy).

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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 Nasdaq, Inc.


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

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