Pfizer (PFE) Beats on Q3 Earnings, Ups COVID Jab Sales View

Pfizer PFE reported third-quarter 2022 adjusted earnings per share of $1.78, which significantly beat the Zacks Consensus Estimate of $1.47 per share as well as our estimate of $1.45 per share. Earnings rose 40% year over year.

Revenues came in at $22.6 billion, which beat the Zacks Consensus Estimate of $21.04 billion. Sales declined 6% from the year-ago quarter on a reported basis, reflecting an operational decline of 2% and currency headwinds of 4%. More than half of Pfizer’s revenues comprised direct sales and alliance revenues from its partner, BioNTech BNTX, for the COVID-19 vaccine, Comirnaty and revenues from Pfizer’s oral antiviral pill for COVID, Paxlovid.

Excluding revenues from Pfizer/BioNTech’s Comirnaty and Paxlovid, sales rose 2% operationally. Higher sales of key brands like Eliquis and Vyndaqel/Vyndamax (globally) and improved Prevnar vaccine sales in the United States were partially offset by weaker sales of Xeljanz and Ibrance globally. Also, a difficult comparison to exceptionally strong growth in the prior year quarter resulted in the decline.

International revenues declined 43% to $8.79 billion. U.S. revenues rose 97% to $13.85 billion.

Adjusted selling, informational and administrative (SI&A) expenses rose 23% (operationally) in the quarter to $3.24 billion due to increased spending for Paxlovid and Comirnaty and new products. Adjusted R&D expenses rose 2% to $2.69 billion due to costs related to oncology and non-COVID-19 vaccines program and costs to develop recently acquired programs.

Segment Discussion

Beginning in the third quarter of 2022, Pfizer has started reporting its revenues under three broad sub-segments of its Biopharma operating segment, Primary Care, Specialty Care and Oncology. Sales in the Primary Care segment declined 1% operationally to $15.85 billion. The Specialty Care unit recorded sales of $3.4 billion, down 3%. Sales of Oncology rose 3% $3.07 billion.

Primary Care

In Primary Care, direct sales and alliance revenues from BioNTech for Comirnaty were $4.4 billion in the quarter, down 65% year over year. Comirnaty sales rose 83% in the United States due to deliveries of the newly authorized Omicron BA.4/BA.5-adapted bivalent booster and approval for primary vaccination of children 6 months to less than 5 years of age. Comirnaty sales declined 86% in outside U.S. markets. Comirnaty sales were better than our estimate of $2.74 billion.

Paxlovid contributed $7.5 billion to sales in the third quarter, compared with $8.1 billion in the second quarter, backed by launches in several countries in 2022. Paxlovid sales missed our estimate of $8.0 billion for the drug.

Alliance revenues from Bristol-Myers BMY for Eliquis and direct sales rose 15% to $1.46 billion. Continued increased adoption in nonvalvular atrial fibrillation as well as oral anticoagulant market share gains benefited alliance revenues from Bristol-Myers for Eliquis sales in the quarter.

Global Prevnar family revenues rose 14% to $1.61 billion. The Prevnar family includes revenues from Prevnar 13/Prevenar 13 (pediatric and adult) and Prevnar 20 (adult). Prevnarrevenues were less than the Zacks Consensus Estimate of $1.84 billion.

Prevnar sales rose 28% in the United States due to strong demand for Prevnar 20 for the adult indication, which offset the unfavorable timing of purchases (both government and private) of Prevnar 13 for the pediatric indication. Prevnar revenues declined 7% in international markets.

Specialty Care

Rare disease drug, Vyndaqel/Vyndamax recorded sales of $602 million in the quarter, up 29% year over year. Vyndaqel/Vyndamax were better than the Zacks Consensus Estimate of $589 million.

Xeljanz sales declined 14% to $502 million due to lower prescription volumes as doctors’ prescribing patterns shifted away from JAK inhibitors following label warnings.

Enbrel revenues declined 8% to $230 million due to continued biosimilar competition in key European markets and Japan. Pfizer has exclusive rights to Amgen’s AMGN blockbuster RA drug, Enbrel, outside the United States and Canada.

Amgen markets Enbrel in North America. Enbrel is Amgen’s largest product, accounting for 21% of product sales.

Oncology

In Oncology, Ibrance revenues declined 3% year over year to $1.28 billion. Sales missed the Zacks Consensus Estimate of $1.41 billion as well as our estimate is $1.43 billion.

Xtandi recorded alliance revenues of $320 million in the quarter, up 3% year over year. Inlyta revenues were $252 million in the quarter, up 3%.

2022 Guidance

Revenues are expected in the range of $99.5 to $102.0 billion compared with $98.0 billion to $102.0 billion expected previously. The mid-point of the revenue guidance indicates operational growth in the range of 29%-32% from the 2021 levels.

The revenue guidance includes approximately $34.0 billion in sales from Comirnaty, up from the prior expectation of $32 billion. Paxlovid sales are expected to be $22 billion, the same as the previous expectations.

Adjusted earnings per share are expected to be in the range of $6.40 to $6.50 compared with the prior expectation of $6.30 to $6.45. The 19 cents improvement in operational adjusted earnings per share guidance was negatively impacted by foreign exchange movements compressing EPS by 9 cents. The mid-point of the earnings guidance indicates operational growth in the range of 68%-71% from the 2021 levels.

Adjusted cost of sales, as a percentage of sales, is expected in the range of 33%-34% (previously 33%-34%). Research and development expense is expected in the range of $11.5-$12.0 billion (maintained). SI&A spending is expected in the range of $12.8-$13.3 billion versus $12.2-$13.2 billion previously. Acquired IPR&D expenses are expected to be approximately $1.4 billion (previously approximately $0.9 billion). The adjusted tax rate is expected to be approximately 12.5% (previously approximately 15.5%) in 2022.

Our Take

Pfizer’s third-quarter results were better than expected as it beat estimates for both earnings and sales. Pfizer also raised its earnings and sales guidance for 2022 as better expectations for operational growth were partially offset by incremental potential headwinds from currency impact. It also raised its outlook for the COVID-19 vaccine by $2 billion, probably expecting higher revenues from the Omicron boosters.

The stock was up 3.5% in pre-market trading, probably as investors were encouraged by the guidance raise despite sales of its COVID-19 vaccine declining 65% in the quarter. This year so far, Pfizer’s stock has declined 21.2% against an increase of 2.9% for the industry.

 

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Though no company is as strongly placed in the COVID vaccines/treatment market as Pfizer, concerns remain about its long-term growth drivers beyond its COVID-related products due to competitive pressure and the impact of the pandemic receding.

Pfizer is witnessing solid pipeline progress and expects to have up to 19 new non-COVID products or indications in the market in the next 18 months. It completed the acquisitions of Biohaven and Global Blood Therapeutics in the third quarter

Pfizer currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pfizer Inc. Price, Consensus and EPS Surprise

Pfizer Inc. Price, Consensus and EPS Surprise

Pfizer Inc. price-consensus-eps-surprise-chart | Pfizer Inc. Quote


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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.

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