Pfizer (PFE) Up 1.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Pfizer (PFE). Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Pfizer due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Q1 Earnings & Sales Top, EPS Guidance Raised
Pfizer’s first-quarter results were strong as it beat estimates for earnings as well as sales. The company raised its 2024 earnings guidance while retaining revenue expectations.
Pfizer reported first-quarter 2024 adjusted earnings per share of 82 cents, which comfortably beat the Zacks Consensus Estimate of 56 cents per share. Earnings declined 33% year over year due to lower revenues.
Revenues came in at $14.88 billion, down 20% from the year-ago quarter on a reported basis, reflecting an operational decline of 19% and a negative currency impact of 1%. Total revenues, however, beat the Zacks Consensus Estimate of $13.86 billion.
The revenue decline, as expected, was due to a steep drop in revenues from its COVID-19 products, Comirnaty and Paxlovid, on lower demand.
While sales of COVID products declined due to lower demand, some key non-COVID products like Prevnar, Vyndaqel and Eliquis, new launches like Abrysvo and newly acquired products from Seagen boosted the top line in the first quarter. Sales of all key products like Prevnar, Vyndaqel and Eliquis beat estimates. Seagen drugs contributed $742 million to the top line in the first quarter. Revenues from Pfizer’s non-COVID products rose 11% operationally in the first quarter.
International revenues declined 44% to $5.37 billion. U.S. revenues rose 9% to $9.51 billion.
Adjusted selling, informational and administrative (SI&A) expenses rose 3% (operationally) in the quarter to $3.45 billion, primarily due to increased spending behind recently acquired and launched products. Adjusted R&D expenses declined 1% to $2.48 billion, driven primarily by lower spending on vaccine programs offset by higher spending on certain acquired assets from Seagen.
Segment Discussion
Pfizer reports its revenues under three broad sub-segments of the Biopharma operating segment — Primary Care, Specialty Care and Oncology. Sales of the Primary Care segment declined 37% operationally to $7.21 billion. The Specialty Care unit recorded sales of $3.84 billion, up 7%. Sales of Oncology rose 19% to $3.55 billion.
Primary Care
In Primary Care, alliance revenues and direct sales from Eliquis rose 10% to $2.04 billion. Alliance revenues from Eliquis beat the Zacks Consensus Estimate of $1.94 billion as well as our model estimate of $1.89 billion.
Global Prevnar family revenues rose 7% to $1.69 billion due to the favorable timing of government orders for pediatric patients in the United States, higher demand in the private market and strong uptake of the adult indication in some ex-U.S. markets. The Prevnar family includes revenues from Prevnar 13/Prevenar 13 (pediatric and adult) and Prevnar 20 (adult and pediatric). Prevnar revenues beat the Zacks Consensus Estimate of $1.60 billion as well as our model estimate of $1.55 billion. Prevnar sales rose 6% in the United States and 8% in international markets.
Direct sales and alliance revenues from Comirnaty were $354 million in the quarter, down 88% year over year. Comirnaty sales declined 64% in the United States due to lower volumes on the anticipated seasonality of demand and the transition to traditional commercial markets. Comirnaty sales declined 91% outside U.S. markets due to lower demand and contractual deliveries. Comirnaty sales missed the Zacks Consensus Estimate of $491 million and our estimate of $469.1 million.
Paxlovid revenues declined 50% to $2.04 billion due to lower contractual deliveries in most international markets as well as in the United States due to the transition to traditional commercial markets. Paxlovid revenues significantly beat the Zacks Consensus Estimate of $865 million and our estimate of $909.2 million. Paxlovid revenues reflected a $771 million favorable adjustment in the quarter related to the return of some unused EUA-labeled treatment courses from the U.S. government.
Newly acquired product Nurtec ODT/Vydura contributed $178 million in the first quarter, much less than $282 million in the previous quarter.
Among the new products, Pfizer’s RSV vaccine, Abrysvo, recorded sales of $145 million in the first quarter compared with $515 million in the previous quarter.
Specialty Care
Global Vyndaqel family revenues of $1.14 billion rose 66% year over year driven by continued strong uptake of transthyretin amyloid cardiomyopathy indication, primarily in the United States and developed Europe. Vyndaqel family includes global revenues from Vyndaqel as well as revenues for Vyndamax in the United States and Vynmac in Japan. Vyndaqel family sales beat the Zacks Consensus Estimate of $952.0 million as well as our model estimate of $907.6 million.
Xeljanz sales declined 17% to $194 million. Enbrel revenues declined 18% to $159 million due to continued biosimilar competition in key European markets and Japan.
Newly acquired product Oxbryta, generated sales of $84 million in the first quarter of 2024 compared with $96 million in the previous quarter.
Another new drug, Cibinqo, approved in 2022, recorded revenues of $42 million in the first quarter of 2024, compared with $37 million in the previous quarter.
Oncology
Pfizer’s top-line numbers in the first quarter of 2024 included revenues from the acquisition of Seagen. Adcetris, Padcev, Tukysa and Tivdak contributed $257 million, $341 million, $106 million and $28 million, respectively, to Pfizer’s oncology revenues in the first quarter.
Ibrance revenues declined 7% year over year to $1.05 billion. Lower demand trends globally due to competitive pressure and price decreases in some developed international markets hurt sales growth. Ibrance revenues slightly beat the Zacks Consensus Estimate of $1.03 billion and our estimate of $1.04 billion.
Xtandi recorded alliance revenues of $418 million in the quarter, up 23% year over year. Inlyta revenues were $237 million in the quarter, down 8%. Lorbrena revenues were $164 million in the quarter, up 49%.
Revenues from oncology biosimilars were $264 million, down 36% year over year due to lower pricing in the United States.
2024 Guidance
Pfizer maintained its revenue guidance for 2024 but raised its adjusted EPS guidance.
Adjusted earnings are expected in the range of $2.15 to $2.35 versus the prior expectation of $2.05 to $2.25 per share. This range includes the expected impact of 40 cents dilution from the Seagen acquisition mainly due to the costs of financing the transaction.
Pfizer expects total revenues to be in the range of $58.5 to $61.5 billion in 2024, almost flat from 2023 levels. On the conference call, Pfizer mentioned that the return adjustment on Paxlovid pushed it toward the higher end of revenue guidance.
The 2024 revenue guidance includes $8 billion in potential combined revenues for Paxlovid and Comirnaty. The $8 billion combined guidance comprises $5 billion in sales from Comirnaty and $3 billion from Paxlovid. Pfizer expects 90% of expected Comirnaty revenues to occur in the second half, mostly in the fourth quarter, due to seasonality of demand.
The total revenue guidance also includes $3.1 billion in expected revenues from Seagen.
The total revenue guidance includes approximately $1 billion due to the reclassification of Pfizer’s royalty income from Other (Income)/Deductions into the Revenue line.
Excluding revenues from Seagen and the abovementioned reclassification, the revenue guidance for legacy Pfizer is $54.5 billion to $57.5 billion, which indicates a decline from the 2023 level.
Pfizer expects cost cuts and internal restructuring, including layoffs, to deliver savings of $4 billion in 2024. Adjusted gross margin is expected to be approximately 70% in 2024. With Comirnaty sales expected to improve in the second half of the year, the gross margin rate is expected to be compressed in the back half of the year. Comirnaty is a low gross margin product due to the profit share component.
Research and development expense is expected in the range of $11.0 to $12.0 billion in 2024. SI&A spending is expected in the range of $13.8 billion to $14.8 billion. The adjusted tax rate is expected to be approximately 15% in 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -5.57% due to these changes.
VGM Scores
At this time, Pfizer has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Pfizer has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Pfizer belongs to the Zacks Large Cap Pharmaceuticals industry. Another stock from the same industry, Astrazeneca (AZN), has gained 1.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Astrazeneca reported revenues of $12.68 billion in the last reported quarter, representing a year-over-year change of +16.6%. EPS of $1.03 for the same period compares with $0.96 a year ago.
For the current quarter, Astrazeneca is expected to post earnings of $0.98 per share, indicating a change of -9.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -1% over the last 30 days.
Astrazeneca has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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