Pfizer Narrows FY 2017 EPS View after Beating Q2 17 Estimates

PfizerAfter reporting lower than expected revenues in the second quarter of the fiscal year 2017, the stocks of the pharmaceutical giant Pfizer Inc (NYSE: PFE) fell early in August.

However, the Pfizer company has reported an increase in earning in Q2 2017 as compared to same period last year. In addition to this, the company exceeded the estimates of analysts in non-GAAP earning as well.

The stocks made a strong rebound and closed yesterday at $33.80. We expect the uptrend to continue shortly and the reasons for the same are discussed below.

Pfizer reported Q2 2017 GAAP earnings of $3.073 billion which translates to $0.51 per share on total revenue of $12.896 billion. It saw a jump of 50% as compared to GAAP earnings of $2.047 billion or $0.33 per share on total revenue of $13.147 billion in the same period last year.

Pfizer

If we exclude the accounting adjustment and acquisition-related costs, the non-GAAP earnings in Q2 2017 are $4.063 billion or $0.67 per share as compared to earnings of $3.929 billion or $0.64 per share in the same period last year. According to the analysts at Wall Street, they expected Pfizer to report earnings worth $0.66 per share on total revenue of $13.08 billion.

Lower demand for Prevnar (Pneumonia vaccine) and Enbrel (Rheumatoid Arthritis Treatment drug) has resulted in a weak performance of this pharmaceutical giant in the quarter ending June 2017.

On a geographic level, in the second quarter, the company was able to generate 49.2% revenue at $6.34 billion from the market in the United States. The remaining markets only contributed $6.55 billion which is equal to 50.8% of total revenue, down 3% on year-on-year basis.

There are two crucial business segments of Pfizer namely Essential Health and Innovative Health. The revenues in innovative health registered a growth of 9% to $7.67 billion over a year ago period. An increase in sales of Champix, Eliquis, Xeljanz, Ibrance, Xtandi, and Lyrica also led to the growth of innovative health division of the company. Ibrance, which is a drug for breast cancer cure, generated revenues of $853 million; an increase of $339 million within a time span of 1 year.

The profits made in the Innovative Health Division got marred by lower than the average performance of Essential Health Division. There was a drop in revenues by 12% to $5.23 billion in second quarter 2017 from $6.04 billion in second quarter 2016. The decline was further attributed to lower sales of sterile injection products, legacy products, and Peri-LOE products. It was partially offset by a growth in revenue in biosimilars. The growth of Essential Health division was also affected by divestment of Hospira infusion systems.

The drug Enbrel is sold outside the United States and Canada. Its sales dipped by 19.5% to $617 million. Similarly, Prevnar sales also plunged 8.2% to $1.15 billion.

There is a growing concern among the investors that blockbuster drugs of Pfizer like Viagra and Lyrica are facing patent expiration. In this regard, Pfizer said that it would receive around 30 patent approvals in the next 60 months. The pharmaceutical giant is hopeful that at least 15 of them would turn into a blockbuster drug.

The 2017 adjusted earnings of Pfizer also narrowed to a range of $2.54 per share to $2.60 per share. The company had previously reported an outlook between $2.50 and $2.60 per share price.

The stock of this pharmaceutical company is trading at forwarding PE ratio of 12.5 which is regarded lower than average of about 16.5x. Pfizer’s forward EV/EBITDA ratio is approximately 10.3x which is also lower than industry’s average figure of 13.4x. Jefferies Group which is an investment research firm has given a price target of $35 for the stock. Hence, it is expected that the shares would attract investors on cheaper valuation.

After testing the support level at 32.05, the stocks of Pfizer are rising. The bullishness of the stock is also confirmed by the rising stochastic oscillator. The stock is facing next resistance level at 36.50 which is quite evident from the chart below. Hence, it is likely that the uptrend to continue shortly.

Pfizer Stock Price Sept 6th 2017

Pfizer Stock Price Sept 6th, 2017

To make a profit from the stock bullishness of Pfizer, we would recommend traders to buy a high or above binary option that is valid for one week. For entering the trade, the stock of this pharmaceutical company should trade near $33.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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