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Pfizer Tops on Q3 Earnings and Revenues, Raises Outlook

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Pfizer Inc.PFE posted third quarter 2015 earnings of 60 cents per share, beating the Zacks Consensus Estimate of 51 cents and increasing 5% from the year-ago period.

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Revenues, which declined 2% to $12.087 billion, were well above the Zacks Consensus Estimate of $11.492 billion.

The Quarter in Detail

While currency movement cut Pfizer's third quarter revenues by 9% ($1.1 billion), operational growth was 6% ($795 million). International revenues declined 13% to $6.5 billion. Meanwhile, U.S. revenues grew 15% to $5.6 billion.

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

The standalone GEP segment recorded a 22% decline in revenues, which came in at $4.9 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 affected revenues. Legacy Hospira sales were $330 million during the quarter.

GIP segment revenues grew 1% to $3.5 billion reflecting strong performance of Lyrica in the U.S., Enbrel in ex-U.S. markets, Xeljanz and Viagra in the U.S. and Eliquis across the world. This was partially offset by generic competition for Rapamune in the U.S.

Consumer Healthcare revenues remained flat at $817 million. Nexium 24HR demand in the U.S. remained strong.

Global Oncology revenues increased 43% to $786 million with performance being driven by Xalkori, Sutent and Inlyta in most markets and recently launched Ibrance which contributed $230 million to sales, significantly above second quarter 2015 sales of $140 million.

Global Vaccine revenues grew 43% to $1.6 billion. Prevnar 13 was positively impacted by continued strong uptake among adults reflecting the success of commercial programs and increased demand ahead of the flu season.

Selling, informational and administrative (SI&A) expenses decreased 1% to $3.3 billion during the quarter. R&D expenses declined 4% to $1.7 billion.

Guidance Raised Again

Pfizer raised its guidance again and now expects 2015 earnings of $2.16 - $2.20 per share on revenues of $47.5 billion - $48.5 billion (old guidance: earnings of $ $2.04 - $2.10 per share on revenues of $46.5 billion - $47.5 billion). The Zacks Consensus Estimate for earnings and revenues is currently $2.09 per share and $47.7 billion, respectively.

Pfizer now expects SI&A spend of $13.6 billion - $14.1 billion (old guidance: $12.8 billion - $13.8 billion) and R&D spend of $7.5 billion - $7.8 billion (old guidance: $7.3 billion - $7.6 billion).

Our Take

Pfizer's third quarter results surpassed expectations with the company beating on both the top- and bottom-line. Pfizer raised its outlook yet again.

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 Hospira acquisition has significantly expanded Pfizer's sterile injectable and biosimilar capabilities. Pfizer has also gained access to Hospira's lucrative biosimilar portfolio of both marketed and pipeline assets.

Pfizer is a Zacks Rank #2 (Buy) stock. While Eli Lilly and Company LLY and Bayer AG BAYRY are a couple of equally well-ranked stocks in the health care sector, AstraZeneca plc AZN is a better-ranked stock with a Zacks Rank #1 (Strong 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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