Pfizer (PFE) Up 1.8% Since Last Earnings Report: Can This Continue?

A month has passed since Pfizer’s (PFE) last earnings report. Shares rose about 1.8% in that time, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Pfizer facing a slowdown? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Top first quarter earnings and sales, EPS forecast increased

Pfizer’s first-quarter results were strong as they beat earnings and sales estimates. The company raised its earnings forecasts for 2024, while maintaining revenue expectations.

Pfizer reported first-quarter 2024 adjusted earnings per share of 82 cents, well ahead of the Zacks Consensus Estimate of 56 cents per share. Profits fell 33% year over year due to lower revenues.

Revenue was $14.88 billion, reported to be down 20% from the same quarter last year, reflecting an operating decline of 19% and a negative currency impact of 1%. However, total revenues topped the Zacks Consensus Estimate of $13.86 billion.

The decline in revenue, as expected, was due to a sharp decline in revenue from COVID-19-related Comirnaty and Paxlovid products due to lower demand.

While sales of Covid-related products declined due to lower demand, some key non-COVID products such as Prevnar, Vyndaqel and Eliquis, new products such as Abrysvo, and newly acquired Seagen products improved revenues in the first quarter. Sales of all key products such as Prevnar, Vyndaqel and Eliquis exceeded estimates. In the first quarter, Seagen’s drug sales revenue was $742 million. Pfizer’s non-Covid-19 product revenues increased 11% operationally in the first quarter.

International revenue fell 44% to $5.37 billion. U.S. revenues rose 9% to $9.51 billion.

Adjusted selling, information and administrative (SI&A) expenses increased 3% (operating) in the quarter to $3.45 billion, primarily due to increased spending on recently acquired and launched products. Adjusted research and development expenses decreased 1% to $2.48 billion, primarily due to lower spending on vaccine programs, offset by higher spending on certain assets acquired from Seagen.

Segment discussion

Pfizer reports its revenues in three broad sub-segments of its Biopharma operating segment – primary care, specialty care and oncology. Primary care segment sales dropped 37% operationally to $7.21 billion. The Specialty Care division reported sales of $3.84 billion, up 7%. Oncology sales increased 19% to $3.55 billion.

Basic care

In primary care, alliance revenue and Eliquis direct sales increased 10% to $2.04 billion. Alliance’s Eliquis revenues are above the Zacks Consensus Estimate of $1.94 billion and our model estimate of $1.89 billion.
Global Prevnar family revenues increased 7% to $1.69 billion due to favorable government ordering timing for pediatric patients in the United States, higher demand in the private market and strong utilization of adult indications in certain non-U.S. markets. The Prevnar family includes revenues from Prevnar 13/Prevenar 13 (for children and adults) and Prevnar 20 (for adults and children). Prevnar’s revenues surpassed the Zacks Consensus Estimate of $1.60 billion and our model estimate of $1.55 billion. Prevnar sales increased 6% in the United States and 8% in international markets.

Comirnaty’s direct sales and alliance revenues were $354 million in the quarter, down 88% year-over-year. Comirnata sales declined 64% in the United States due to lower volumes due to expected seasonality in demand and the shift to traditional commercial markets. Comirnata sales outside U.S. markets dropped 91% due to lower demand and contract deliveries. Comirnata’s sales surpassed the Zacks Consensus Estimate of $491 million and our consensus estimate of $469.1 million.

Paxlovid revenues declined 50% to $2.04 billion due to lower contract deliveries in most international markets, as well as in the United States due to the shift to traditional commercial markets. Paxlovid’s revenues significantly exceeded the Zacks Consensus Estimate of $865 million and our consensus estimate of $909.2 million. Paxlovid revenues reflected a favorable adjustment of $771 million in the quarter related to U.S. government reimbursement of certain unused EUA treatment courses.

Newly acquired Nurtec ODT/Vydura contributed $178 million in the first quarter, significantly less than $282 million in the prior quarter.

New products included Pfizer’s RSV vaccine Abrysvo, which reported first-quarter sales of $145 million compared to $515 million in the previous quarter.

Specialist care

Vyndaqel’s global revenues of $1.14 billion increased 66% year-over-year on continued strong interest in transthyretin amyloid cardiomyopathy, primarily in the United States and developed Europe. The Vyndaqel family includes Vyndaqel’s global revenues, as well as Vyndamax’s revenues in the United States and Vynmac in Japan. Vyndaqel Family sales surpassed the Zacks Consensus Estimate of $952.0 million and our model’s estimate of $907.6 million.

Xeljanz sales fell 17% to $194 million. Enbrel’s revenue fell 18% to $159 million amid continued biosimilar competition in key European markets and Japan.

The newly acquired Oxbryta product generated sales of $84 million in the first quarter of 2024, compared to $96 million in the previous quarter.

Another new drug, Cibinqo, approved in 2022, reported revenue of $42 million in the first quarter of 2024, up from $37 million in the previous quarter.

Oncology

Pfizer’s first-quarter 2024 numbers included revenue from the Seagen acquisition. 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’s revenue fell 7% year-over-year to $1.05 billion. Lower global demand trends resulting from competitive pressures and price declines in some developed international markets are negatively impacting sales growth. Ibrance’s revenues slightly beat the Zacks Consensus Estimate of $1.03 billion and our consensus estimate of $1.04 billion.

Xtandi reported alliance revenues of $418 million in the quarter, up 23% year-over-year. Inlyta’s revenue for the quarter was $237 million, down 8%. Lorbrena’s revenue for the quarter was $164 million, up 49%.

Oncology biosimilar revenues were $264 million, down 36% year-over-year due to lower prices in the United States.

The story continues

Guidelines 2024

Pfizer maintained its 2024 revenue forecasts, but raised its adjusted EPS forecasts.

Adjusted earnings are expected to be $2.15 to $2.35, compared with earlier expectations of $2.05 to $2.25 per share. This range includes the expected dilution impact of 40 cents from the Seagen acquisition, primarily due to transaction financing costs.

Pfizer expects total 2024 revenue to be between $58.5 billion and $61.5 billion, almost flat from 2023 levels. During the conference call, Pfizer mentioned that the Paxlovid payback adjustment has moved it toward the high end of revenue guidance.

Revenue projections for 2024 include potential combined revenues of $8 billion for Paxlovid and Comirnaty. The $8 billion total guidance includes $5 billion in sales for Comirnata and $3 billion for Paxlovid. Pfizer expects 90% of Comirnata’s expected revenue to come in the second half, mainly in the fourth quarter, due to seasonality in demand.
Total revenue guidance also includes Seagen’s expected revenue of $3.1 billion.

Total revenue guidance includes approximately $1 billion related to the reclassification of Pfizer’s royalty revenue from “Other (Income)/Deductions” to “Revenue.”

Excluding revenue from Seagen and the above-mentioned reclassification, legacy Pfizer revenues are estimated to be between $54.5 billion and $57.5 billion, down from 2023 levels.

Pfizer expects cost reductions and internal restructuring, including layoffs, to result in savings of $4 billion in 2024. Adjusted gross margin is expected to be approximately 70% in 2024, based on expected sales improvement at Comirnaty in the second half of the year, gross margin is expected to compress in the second half of the year. Comirnaty is a product with a low gross margin due to the profit-sharing component.

Research and development spending is expected to be between $11.0 billion and $12.0 billion in 2024. SI&A spending is expected to range from $13.8 billion to $14.8 billion. The adjusted tax rate is expected to be approximately 15% in 2024.

How have estimates changed since then?

It turns out that estimate revisions have been trending downward over the past month.

As a result of these changes, the consensus estimate moved by -5.57%.

VGM results

At this point, Pfizer has a weak Growth Score of F, but its Momentum Score is doing much better with an A. Plotting a somewhat similar path, the stock was given a B on the value side, putting it in the top 40% for this investment strategy .

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Pfizer has a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Pfizer is a member of the Zacks Large Cap Pharmaceuticals industry. Another stock in the same industry, Astrazeneca (AZN), has gained 1.3% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

In its most recently reported quarter, Astrazeneca reported revenues of $12.68 billion, representing a year-over-year change of +16.6%. EPS of $1.03 for the same period compared to $0.96 a year ago.

For the current quarter, Astrazeneca is expected to report earnings per share of $0.98, representing a change of -9.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -1% over the past 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 Rating of A.

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