Pfizer Earnings, Guidance May Not Be Enough for Investors

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Pfizer Inc. (NYSE: PFE) reported fourth-quarter and full-year 2017 results before markets opened Tuesday. The pharmaceuticals giant posted quarterly adjusted diluted earnings per share (EPS) of $0.62 and revenues of $13.7 billion. In the same period a year ago, Pfizer reported EPS of $0.42 on revenues of $13.63 billion. Fourth-quarter results also compare to consensus estimates for EPS of $0.56 and $13.68 billion in revenues.

For the full year, Pfizer said it had revenues of $52.55 billion and adjusted EPS of $2.65, compared to revenues of $52.82 billion and $2.40 per share a year ago. Analysts were looking for revenues of $52.53 billion and EPS of $2.60.

The company reported a fourth-quarter and full-year benefit of $10.7 billion related to the new tax law. The benefit includes the negative $15 billion impact of the repatriation tax that the company plans to pay over the next eight years.

The company said it took a hit of $2.1 billion in 2017 due to the loss of exclusivity on certain products, and it expects a hit of $2 billion in 2018 for the same reason.

Full fiscal year guidance projects revenues of $53.5 billion to $55.5 billion and adjusted EPS of $2.90 to $3.00. Analysts had anticipated revenues of $53.88 billion and EPS of $2.78. For the first quarter, analysts are looking for EPS of $0.69 and revenues of $13.03 billion.

The capital allocation plan for 2018 includes a one-time total bonus payment in the current quarter to non-executive employees of approximately $100 million. Pfizer said it expects to invest about $5 billion in U.S. capital projects and also plans to contribute $500 million to its pension plan this year.

Pfizer returned $12.7 billion to shareholders last year, comprised of dividend payments totaling $7.7 billion and share buybacks of $5 billion. The company has $16.4 billion in its current share buyback authorization. Pfizer raised its quarterly dividend by about 6.3% to $0.34 per share, beginning with a payment scheduled for March 1.

While the company did a little better than analysts expected, performance was only a little better and the outlook for next year, including the loss of exclusivity on certain products, means that the stock’s performance will be relatively flat again. Even the current dividend yield of nearly 3.5% is not enough to overcome slow revenue and profit growth.

Shares closed at $39.02 on Monday, up less than 0.1% for the day. They traded down about 0.6% in Tuesday’s premarket to $38.80, in a 52-week range of $30.93 to $39.43. The high was posted on Monday. The consensus 12-month price target on the stock was $39.10 before this morning’s report.