Investors OK With Pfizer Earnings, Not OK With Guidance

Pfizer Inc. (NYSE: PFE) reported fourth-quarter and full-year 2015 results before markets opened Tuesday. The company reported quarterly adjusted diluted earnings per share (EPS) of $0.53 and revenues of $14.05 billion. In the same period a year ago, Pfizer reported EPS of $0.54 on revenues of $13.12 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.52 and $13.56 billion in revenues.

For the full year, Pfizer reported EPS of $2.20 and revenues of $48.85 billion, compared with 2014 EPS of $2.26 and revenues of $49.61 billion. Analysts were looking for EPS of $2.19 and revenues of $48.36 billion.

Quarterly revenues were up 7% year over year on strong operational growth, partially offset by a 7% negative impact from foreign exchange rates. Excluding the effects of its Hospira acquisition, foreign exchange rates and revenues from vaccine acquisitions, fourth-quarter revenues rose 5%.

Operational revenue growth was partially offset primarily by the loss of exclusivity and associated generic competition for Celebrex in the United States and some other developed markets, and Lyrica in certain developed Europe markets.

Pfizer guided 2016 revenues in a range of $49 billion to $51 billion and adjusted EPS in a range of $2.20 to $2.30. At constant currency rates, revenues are forecast in a range of $51.3 billion to $53.3 billion and adjusted EPS is expected to fall in a range of $2.36 to $2.46. Foreign exchange rates are expected to cost the company $0.09 per share in 2016, and Venezuelan foreign exchange rates are expected to cost Pfizer another $0.07. The proposed merger with Allergan has no impact on the company’s outlook.
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Analysts had been looking for 2016 EPS of $2.36 and revenues of $52.49 billion, and Pfizer’s forecast, including currency effects, is lower than expected.

CEO Ian Read said:

I believe that we are well positioned to deliver another strong year in 2016 as we expect that our key in-line products will continue to perform well while we expect to advance our product pipeline, notably our potential registrational programs in key therapeutic areas such as oncology, vaccines, cardiovascular and metabolic diseases, inflammation and rare diseases.

The integration of Hospira is well underway and we now look forward to completing the combination with Allergan, which we still expect to occur during the second half of this year. We see this transaction as a very effective driver of accelerating the growth potential of our Innovative business, strengthening our Established business and more efficiently allocating our capital globally, all factors which remain consistent with our overarching strategy of value creation.

Shares closed at $30.17 on Monday, down about 1% in a 52-week range of $28.47 to $36.46. The stock traded down about 1% in Tuesday’s premarket session. The consensus price target for the shares is $40.19, according to Thomson/First Call.