News

Pfizer Q1 Results Fall Short

30.04.2013 -

Pfizer reported much lower-than-expected first-quarter sales on Tuesday, hurt by weak demand for its Prevnar 13 vaccine and generic medicines, and it trimmed its 2013 profit forecast.

Earnings for the quarter were also slightly below Wall Street expectations, and Pfizer shares fell more than 2%.

"It was just a lousy quarter, relative to company's potential and earnings power," said Michael Liss, portfolio manager with American Century Investments.

Liss said U.S. sales of Prevnar, the company's third-biggest product, were $150 million below forecasts because wholesalers, with adequate supplies already on hand, held off on purchases of the vaccine used to prevent pneumonia and other infections.

Pfizer said it earned $2.75 billion, or 38 cents per share, in the first quarter, up from $1.79 billion, or 24 cents per share, a year earlier, when it took charges to boost productivity and address legal matters.

Excluding special items, Pfizer earned 54 cents per share. Analysts on average expected 55 cents.

Revenue fell 9% to $13.5 billion, below Wall Street expectations of $13.99 billion. It would have declined 8% if not for the stronger dollar, which hurts sales in overseas markets.

Sales of Prevnar 13 were down 10% at $846 million. They rose 19% in the prior quarter.

"Prevnar just jumps off the page as a disappointment," said Edward Jones analyst Judson Clark. But he described the sales decline as a cyclical phenomenon "that will correct itself."

Clark said Pfizer shares, which had risen 22% so far this year, were still attractively priced at about 13.3 times the company's expected earnings per share for 2013. That compares with a price-to-earnings ratio of about 15 for other large drugmakers, he said.

Pfizer said sales rose only 5% in emerging markets due in part to reduced government purchases of Prevnar 13 and of the company's Enbrel treatment for rheumatoid arthritis and psoriasis. Emerging market sales had increased 17% in the prior quarter.

Sales of generic medicines, which Pfizer calls established products and sells mainly overseas, fell 16% to $2.35 billion. That was also a reversal from the prior quarter, when they rose 3%.

Sales of cholesterol fighter Lipitor, which has been competing with cheaper generics since November, plunged 55% to $626 million, while sales of impotence drug Viagra fell 7% to $461 million.

Investors have bid up Pfizer shares this year on high hopes for its pipeline of experimental drugs and the recent approvals of its treatments for cancer, rheumatoid arthritis and blood clots.

Pfizer has also attracted investors through its efforts to spin off nonpharmaceutical operations and return much of the proceeds to shareholders through bigger dividends and repurchases of common stock.

In November, Pfizer approved an additional $10 billion in share repurchases, after buying back almost $6 billion in stock in 2012 through an earlier $10 billion authorization.

The company in February spun off its animal health business into a new company called Zoetis. At the time, Pfizer said it would control roughly 80% of Zoetis, but divest its stake within 18 months and return much of the proceeds to shareholders in the form of stock repurchases.

Pfizer said it expected full-year earnings of $2.14 to $2.24 per share, down from its previous forecast of $2.20 to $2.30. It cited the falling Japanese yen, which is hurting sales in that important market, and the impact of lost revenue from the 20% of its animal health business it has already spun off into Zoetis. The company earned $2.19 per share last year.